>> the fed has all the evidence they would need to cut or stay put. >> the fed could cut rates four or five times this year. >> it is a question of when. >> as you see from the policy speak, there is no hurry for cuts anytime soon. >> we will talk about the resiliency of the u.s. economy. we think that will continue to push out when the fed easing cycle starts. >> this is bloomberg surveillance. jonathan: let's get your week started live from new york city.

for our audience worldwide, this is bloomberg surveillance alongside lisa abramowicz. the s&p 500 unchanged on a four day winning streak. five weeks of gains, rising 14 of the last 15 weeks. >> crossing that threshold we were flirting with, this record high. it still is disproportionately weighted to big tech. have we gotten conviction yet or is this simply there is nowhere else to go other than up? jonathan: if you want more earnings, nvidia just around the corner. looking ahead to cpi, the president had the opportunity for a pre-super bowl interview. he declined. some people suggested there were not enough eyes on that particular conversation, so they

put out a video on shrink laois and for president biden. annmarie: president biden is still trying to win on the economy. this video, he is talking about companies putting out less of a good for the same price. we have heard the white house complain about this. why would you remind viewers that there are less oreos or less doritos? second, we heard from unilever last week, one of the companies that has said we are doing shrink laois in. we do -- shrinkflation. it is reminding the american consumer that there is still an underlying issue of inflation. lisa: it raises the question of why he did not speak in a more candid, off-the-cuff address other than this. he said he wanted to not destroy the mood. what do you think shrink laois

and is? >> it is a downer. >> is this resonating with voters? no. 42% of americans said they felt trump would be a better steward for the economy. 31% choosing biden, 21% saying they trusted neither candidate. >> we have seen this in poll after poll when it comes to the economy and handling of inflation. voters think they would be in better hands with the former president. the timeline might be on this president's side. people are starting to feel better about the economy. i am not sure if the president should have reminded them that some of their packaging has less crisps. jonathan: let's talk about foreign policy, nikki haley coming up a little later in the program, about 90 minutes away. with some controversial remarks on nato.

>> when it comes to nato, we have heard from trump again talking about delinquent nato partners, pointing the finger at europe. for many, it feels like he crossed the line saying he would tell russia to go in on partners that are not reaching defense targets. i was struck by reaction from the gop. some members from the gop telling the new york times this is your responsible. lindsey graham saying, i do not know why you're asking me about this. we know how he feels about nato. marco rubio saying this is how he talks as a politician. jonathan: equity futures totally unchanged and the bond market yields down about a basis point or so. crude negative and we all have an eye out for the potential of another deal, another big deal.

>> it has just been announced that diamondback is planning to merge. this speaks to the consolidation we have seen. you wonder how much the acquisitions by exxon and chevron have accelerated this type of consolidation. we expect more the same with more details coming up. jonathan: have we completed the consolidation in that patch? lisa: a lot of people are saying no, but the big deals have been done. the idea is first you have understanding of what it will cost to get it out of the ground and then efficiencies of scale at a time when there will not be the same focus on getting more drills into the ground and more production on the other site. jonathan: diamondback says the

deal will close in the fourth quarter. look out for that. coming up, the s&p 500 pushes past 5k. donald trump takes aim at nato and the latest read on u.s. inflation around the corner. cpi drops tomorrow morning. we begin with our top story after closing above 5k for the first time ever. hsbc is cautious on the road ahead. we are more concerned about fed rate expectations. this has not inflicted any pain on the s&p 500. that could change. continued rises in rate expectations are more likely to prompt a pullback. you are calling it the reverse goldilocks trade. you have seen rates reprice. equities have not budged. why not?

>> i guess the rise in rate expectations has not really been enough yet. this is similar to where we have been last year where equities were rising significantly as well in june and july. at some point, the rise in yields was too much and interest rate volatility was picking up, so the reason there are no multiples yet and why we are not bothered with lower-than-expected earnings delivery outside the magnificent seven has been the tremendous earnings delivery but from a broader market perspective because interest rate volatility is still very benign. as long as that continues, that is not going to hurt equities and other risk assets yet. lisa: can you talk about how your positioning in a time where there seems to be this momentum?

there is an increase in dividends. you are seeing strength underpinning some of the rate expectations, so why would you not be slightly bullish even if you are concerned about whatever the new acronym is? >> there can be too much of a good thing and that is the concern i have now. back to where we were last year when they expected 0% gdp growth and it ended up being 5%, where earnings expectations were nowhere near what the actual earnings into being, i thing we started q3 with $54 on the s&p earnings and into that being $58. you should have been bullish, but the problem was a little bit of of an object in inflation then was already enough to send

pain across the asset classes. i'm not advocating for the next six to 12 months to be dire, but i do think with systematic investors, volatility target strategies, all of that is elevated already and you want to buy into that, but for now it is hiding out in shorter duration stuff, so out of the higher stuff. was and equities come it is the short direction and cyclical markets, things like japan and latin america. we still, given the positioning is low contrary to equities, we still like commodities here. >> that is where i wanted to go, this idea that the only diversifiers can be found in commodity markets at a time when

that trade seems to have failed and people talk about oversupply from the u.s. relative to demand. >> when we look at the performance between september and november, what happened was all the asset classes went down, whether that was investment or in equities. almost everything went down with this little bit of hawkishness from the fed, whereas between mid november and december that was the mirror image that everything was swept higher and commodities were doing its own thing, particularly oil. i think when we look at u.s. supply that is baked into the cake. when we look from an investment perspective, the front of the curve has gone more into long positions. the demand picture is fine and

we are starting to see signs of inventory restocking again and manufacturing globally starting to pick up. that argues for commodity exposure anyway and then we look at broader commodity positioning , close to all-time lows. energy positioning is close to 10 year lows. it is an unloved trade that we would be happy to jump off rather than chasing the magnificent seven higher. jonathan: cpi tomorrow. a lot of people are still comfortable being long risk because there is little evidence the stronger data is derailing the disinflationary trends of the last six months. do you anticipate they will be wrong in the next six months? max: i do think so. not because i think the data will show a massive inflation

wave. i do not think it will show that we are suddenly going to see core inflation go from 3% to 6%. but because the starting point in inflation expectations is short-term inflation expectations is so much more dovish now, that means we only need a little of what we had last summer. inflation went from 3% to 3.4% and even that, which was just falling out of the 12 month window, was not only enough to freak out the market but to freak out the fed. even the fed was adding one additional hike in december, so all we need is less dovish data and i think that would already be enough to send a bigger pain across asset classes. jonathan: inflation data tomorrow morning. max kettner of hsbc. lisa: one of the key questions,

written about late last week by bank of america, if the fed does not cut rates or inflation is higher than people expected, does that kill the equity rally? max says yes. that is one of the key questions underpinning the market. jonathan: equity futures totally unchanged on the s&p 500. let's get you an update on stories elsewhere with dani burger. >> diamondback energy and endeavor set to merge. it will be valued at over $50 billion. it is the latest in a wave of consolidation in the energy sector. exxon made major acquisitions over the last 12 months. president biden's reelection campaign has launched a tiktok account, the first time biden has joined tiktok in an official capacity. the chinese owned app has been

embroiled in controversy in washington. they move is part of a broader strategy by the campaign to reach younger voters on social media. the kansas city chiefs have been crowned the first back-to-back super bowl champions in 19 years, defeating the san francisco 49ers in overtime. quarterback patrick mahomes was named m.v.p.. taylor swift mania her much anticipated appearance. that is your bloomberg brief. jonathan: i understand the entertainment value, but what was the fuss about about making it in time? she had hours to spare. i think she had a night to go home before making it to vegas. >> people just wanted drama. >> people saw the dates and did not put into account the time difference between japan and the united states, but this felt like pure entertainment. usa today says, for people saying there is too much swift,

she was on for all of 55 seconds during 4.5 hours. jonathan: it feels that way. we can talk about the commercials later. i know you have views. next, trump taking aim at nato. >> the presidents of a big country said, if we do not pay and we are attacked by russia, will you protect us? i would not protect you. i would encourage them to do whatever they want. jonathan: reaction to those comets up next. live from new york city this morning. ♪ how am i going to find a doctor when i'm hallucinating? what do you think, fever monster? what about zocdoc? zocdoc? dr. castell has a great bedside manner.

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jonathan: equitiesjonathan: on the s&p 500 totally unchanged this monday morning after closing above 5k for the first time ever. yields are a lower this monday, down a basis point or two. trump taking aim at nato. >> you have to pay up. they asked me that question, the president of the big countries. if we do not pay and we are attacked by russia, will you protect us? i said, you did not pay cut your delinquent. he said, yes, let's say that happened. i would not protect you. i would encourage them to do what they want. >> here's the latest, donald trump's comments during up backlash from world leaders. the world in which the decline of u.s. foreign policy is a world in which geopolitical risk rises for markets. let's go straight to those comments from the former president over the weekend.

i will not get into the motivations. let's talk about the consequences. >> the consequences are it makes people very nervous and i'm not meaning to dispel the nervousness but it makes people more nervous than they should be. if you want an indication of the true intent of the united states establishment, you have no further to look than the national defense authorization bill signed into law a couple months ago that requires congressional approval before you leave nato. what you have here is essentially trump red meat designed to amplify and isolation -- an isolationist message. that is all well and good but does not match up with the intent of congress and of the american people either. you have not only -- pretty much

united support for israel but three quarters of the house and almost all of the senate supporting ukraine as well. there is a real disconnect between what trump is saying and what the united states government thinks and feels and acts on. lisa: we have seen republicans get in line behind the former president, most notably with the border deal. is it a concern that republicans will line up and become softer when it comes to nato? terry: i think it is a risk. right now, i do not think it is more than a trailer risk. i think the majority of congress is in favor of supporting ukraine and israel, supporting what we think -- what i think of as global leadership obligations of the united states. i do not think that is going to change markedly. we are in a moment where a lot of individual members are

looking at their own bases, not thinking about trump and national. they are saying, how do i navigate through this particular shoulder -- shoal? you will see things that look like more support for the trump position than they are and i think that is a mirage. annmarie: you mentioned the foreign policy a bill that cleared a hurdle in the senate over the weekend. what is its chance of survival in the house? terry: i think it happens in a couple weeks. i think the house has to bumble through this. if you perceive from the -- that three quarters of the house supports ukraine and ukraine aid, i think the house republican leadership, which controls the ability to put things on the floor, will come under a lot of pressure.

and have to spring this bill loose. there are a couple ways to do that. one is to use a special suspension calendar that requires two thirds of the overall house. you saw that used in the tax bill. the other way is to employ a discharge petition. a simple majority requiring the bill be brought to the floor. generally speaking, i think the house republican leadership would prefer not to be embarrassed further after the embarrassments they have brought upon themselves in the last week or so. that is not full proof. they might prefer to be embarrassed more, but i think in the end this gets done. lisa: there is a question about potential volatility because over the weekend the white house tried to push back against the special counsel report, calling it a cheap shot and saying the special counsel is trying to score political points. what do you make of the rebuttal

from the white house? terry: you're familiar with the streisand effect, where streisand complained to google earth her house was in view and everyone started to look further at the house to make sure they could see it. i think you have that effect going on here. white house continued to protest , even setting out a fundraising letter under jill biden's signature a couple times protesting all of this. firstly, this was a disaster for the white house and ease and is an ongoing disaster for the white house. -- is an ongoing disaster for the white house. you have a situation where they have nine months to deal with it. i think that the special counsel piled on and could have said what he thought about the reasons not to prosecute without going into what amounts to

opinion, but it is out there and it is done. they will have to deal with it, but they cannot deal with it by denying it or -- as one pundit put it, biden has been making gaffes for years. lisa: do you get the sense there is a greater chance of another democrat coming into take his place in the election? terry: now. -- no. the democratic primaries are not set up for that. biden rolls on. there is no serious democratic opposition. what it is going to take is by the time you get to the convention in the summer, you are going to have to end up with -- either get further change in biden's condition or a bunch of rogue delegates saying we are not doing this, i do not care what the rules say. jonathan: perfectly framed about

the situation in washington, d.c. and for the nation. the president rolls on seems to be the take away. lisa: sort of the reason why people are wondering what is going to happen in november in a time where -- i do not know how you can explain what is going on now. it was sort of this over the weekend talking about this denial that put more focus on concerns that a lot of americans have now. annmarie: the questions are now going to become -- which is why you have to think the white house thought they would not to a super bowl interview, because it continues to be on top of our minds, that you are going to -- he has been making gaffes for years, but now they're going to become more apparent because the special counsel said they think he is a well-meaning but elderly man who has issues with memory. jonathan: we have been doing these for the last 20 to 40 years. it is not a great message. lisa: why isn't he addressing

the real issue? there is speculation about why he didn't go to the super bowl. jonathan: you have potentially a former president undermining the defense because of nato. you have the focus on president biden and his mental acuity and you wonder how this shows up in the polls. i am not sure the comments on nato make a difference whatsoever. lisa: no. do you get people staying home or do you have a resignation to a reality people do not want? jonathan: equity futures unchanged. live from new york, this is bloomberg. ♪

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jonathan: a four-day winning streak on the s&p 500. equity futures like this. unchanged on the s&p. the nasdaq slightly firmer, positive via -- positive by almost .1%. stringing together a fifth week of gains. bloomberg did the counting so i don't have to. it took 719 sessions for the s&p 500 to set this latest milestone. lisa: basically what we are talking about is the unloved

rally that was driven by a small select group of stocks. is this something that you cannot fight against or is this something that is looking a little frothy and set for a pullback if people look at inflation and see rate cutting sentiment is -- jonathan: still this equity market is looking all right. take a look at the two-year. down about a basis point. but the two-year had another soft week last week. the yield climbs by more than 11 basis points. the data was pretty strong. jobless claims a little bit lower. the pushback continued by fed officials was reinforced by the information we had. lisa: that is why i really did this question, with a rate cut in march on the table, some are asking what if the fed does not cut this year? i wonder how much this has to do with dividends and buybacks. goldman sachs talking about how everyone is buying -- how

everyone is increasing dividends and buybacks. our stocks -- are stocks the new income play? jonathan: in a word, earnings. the magnificent seven protected to post combined profit growth of about 55% in the fourth quarter. lisa: when people say is this another 1999? other people say it is not just a placard with nothing behind it, 15 employees hoping to pay themselves with debt. jonathan: who are you suggesting that was? lisa: i'm just saying, there is not this feeling of a shell company that's going to go bust. jonathan: it's real. earnings next wednesday. let's go to foreign-exchange. i was trying to work out who that -- who bramo was about specifically. here are your top stories. two hostages free after an

operation by israeli forces in gaza. as prime minister netanyahu vows to continue the military campaign. according to the white house, president biden spoke directly with the israeli leader yesterday, telling them not to proceed without quote, a critical an executable plan for the safety and support of civilians. talking about the southern part of goff -- gaza, this is where many civilians fled to after the conflict started. annmarie: they moved south. the israelis told them to move south and that is why this has become an issue that not just from the white house but capitals around you europe -- around europe say they are concerned about the safety of these people. egypt has warned hamas it needs to reach this accord about the hostages in about two weeks or israel will proceed with the rafah invasion. jonathan: much harder starts coming for the president of the

united states. given where the polls are right never president biden,, you imagine an even harder stance is going to come in the future? lisa: privately he has been telling his aides that he really disagrees with the prime minister of israel and he thinks that he is not necessarily being as reasonable as he would like and does not have as much influence. why hasn't he gone public with that? especially because netanyahu is not popular in israel and a lot of people think he is more extreme and not protecting the nation. annmarie: we did see some of that creep out last week when biden said he did think what netanyahu was doing was quote, over the top. a little but of that frustration is turning to come out but it is palpable behind the scenes. jonathan: the focus is back on the pentagon. defense secretary austin is back in the hospital. he was admitted last night for symptoms suggesting an emergent bladder issue. dr. saying at this time it is not clear how long he will remain hospitalized. his duties have been transferred

to the deputy defense secretary. lisa: two things notable about this. the dod came out immediately to say he was being transferred to a hospital. they learned their lesson about what happened prior to when they didn't and they were less transparent and the white house was confused. they came out after he was transferred about two hours later, saying that he is not -- he is not in the stable condition where he can continue his duties. a lot of concerns. this week alone, he was supposed to have two meetings in europe, one regarding ukraine and the other regarding nato defense. jonathan: far more transparency this time around. the kansas city chiefs are repeat super bowl champions after a victory over the san francisco 49ers. a late field goal tied the game and then patrick mahomes led the chiefs down the field to chant -- to clint's the third title in five years.

taylor swift was in attendance. after making a tour stop in japan on saturday with hours to spare. amh, never mind taylor swift and travis kelce. we want the bramo refute on the commercials at halftime. lisa: there were so many movies coming out and they all just said go to the trailers. i also like the dunkin' donuts one. jonathan: that was my favorite. annmarie: you stayed up for it? i find it notable. lisa: i just watched at halftime. annmarie: beyonce announces a new country album during the commercials. jonathan: do you think that was the big takeaway? annmarie: 100%. jonathan: i'm not sure a lot of our audience would have agreed with that. diamondback and endeavor announcing they are merging. $26 billion. the combination will create

another oil and gas giant. let's talk about this deal, off the back of several other big deals including chevron, exxon and others. how important is it? >> it's a big deal. -- midland side of the permian. it is really two areas. texas and southeast new mexico. it creates a big company and amazing growth from diamondback. it is worth remembering that this company was created in 2007 with 800 barrels a day of oil production. after the merger, it is going to be producing 800,000 barrels a day. jonathan: exxon acquiring pioneer, $60 billion deal.

what is left? what is left to consolidate? javier: we still see more consolidation in the permian. we have seen the biggest deals, the obvious ones, family owned companies that want to cash out or they have a transition at the head of the families. i think there are still too many permian companies in the range of 250,000 barrels a day that they need to combine among themselves. i don't think we are done. we will still see big numbers of consolidation, but perhaps the biggest, we have already seen. lisa: what is the goal behind some of these mergers? is it economies of scale? is it that you can get more production if you have some subject method that goes across a bigger swath of land -- strategic method echoes across a bigger swath of land? javier: the permian has really moved into the phase of mass

production of barrels of oil. reducing costs per barrel is very important and creating companies large enough to tick the box for investors requiring companies in the range of $50 billion to invest. that is what i think those companies that are still -- are going to have to look for options to create larger vehicles to attract the attention of investors. annmarie: how do you seal it -- how do you see a deal like this and top of the others jon noted? do you think they are stranded assets as the biden administration called them? javier: i don't think they are stranded assets. a good price, good return but i still see demand for oil. we see global oil demand growing. we are going to hear about big

oil demand until about the 20 30's. so far, very healthy demand. that is exactly on track for the last 20 years and demand has been growing every year. we have yet to see the big decentralization of oil demand. annmarie: shale roaring back. what does this message send back to opec and abu dhabi? javier: there is a big problem for opec because last year, this year, most likely next year we will see a lot of oil production in the americas. it is not just the permian. it is also canada, brazil. you put all of them together, if the u.s. slows down a bit, all of those countries are going to

be able to produce about one million barrels of oil a day combined, which is enough to offset the oil demand around the world. the main problem for opec is the world's not transitioning away from oil, it is transitioning from opec oil to american oil. jonathan: that is such a fantastic point. does that explain how comfortable we are in the situation in the middle east, specifically in crude markets with prices still pretty low a lot of to the tension we are seeing? javier: you have -- if you had told me 20 years ago we were going to have a big military campaign in the gaza strip again , significant attacks by the houthi's to commercial shipping in the red sea, and oil prices were going to be under $100, i would not believe it and yet here we are. that goes into how much oil production has grown in the americas. let me finish with a piece of data from this morning.

if you add the united states total petroleum production and canadian total production, that is 25% of the world's oil production right now. one in four barrels of oil today are produced in the united states or canada. that really is why potentially the middle east as having limited impact in the oil market. jonathan: thank you sir, javier blas of bloomberg opinion. jonathan: coming at it -- lisa: coming at a time where there is this goal to bring down prices ahead of the election and in response a lot of the demand. is there any coordinated effort to get those barrels out the way there is an opec or is it sickly a free-for-all? that is the question. does it create a cap to how high prices can go because they can keep ramping up production, especially with the new corporate structure? jonathan: despite the best efforts of the governments in canada and the united states. lisa: the opposite of opec.

annmarie: this is why when you talk to middle easterners, they scratch their head, john kerry telling them the need to do more on climate but then they say look at your numbers compared to our numbers when it comes to crude production. jonathan: wti, 75.99. let's give you an update on stories elsewhere. dani burger with your bloomberg brief. dani: israel launched a series of strikes in the southern gaza strip on monday. the military says the operation freed two hostages. the strikes came after president biden urged prime minister netanyahu to do more to protect civilians. more than half a million palestinians have fled to rafah. u.s. defense secretary lloyd austin has been hospitalized for the second time in a month. the pentagon chief was admitted into care with an apparent

bladder issue. the deputy defense secretary has taken over his functions and duties. austin has been incurred a size or failing to disclose he had been hospitalized on new year's day for complications from prostate cancer surgery. president biden has called out major snack brands over shrink inflation at of the super bowl. he did not name specific companies nor did he offer a solution on how to hold them accountable for selling less product at a higher price. >> some companies are trying to pull a fast one by shrinking their products little by little and hoping you won't notice. give me a break. the american public is tired of being played for suckers. i'm calling on companies to put a stop to this. dani: even as inflation appears to be slowing, the economy remains a top issue for many americans heading into the election. that is your bloomberg brief. jonathan: didn't he complain about the price of a stickers in recent weeks? annmarie: the prices stay the

same while the size of the bar shrunk. bloomberg did a test on this and in america, the snickers bar stayed the same. in australia, trump. lisa: he's like the uncle that shows up, like there's only five chips in here versus eight chips last year. jonathan: this has been going on for like a decade. up next, uscp i just around the corner. >> certainly a model that you take quickly. but is not a model that is good for the economy. if i could get these kinds of numbers sustained and brought on, that is what i'm looking for. jonathan: that conversation is coming up next. u.s. cpi. just around the corner. ♪

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jonathan: 43 minutes away. 7:30 eastern time, presidential hopeful nikki haley on bloomberg tv. that conversation around the corner. equity futures this morning. totally unchanged. u.s. cpi coming up next. >> it's a very strong labor market. gratified to see inflation come down. hoping it continues to come down. to me there is certainly a model that is good. if i can get these kind of numbers sustained, and even better, broaden, that is what i'm looking for. jonathan: u.s. cpi set out tomorrow followed by ppi on friday. investors looking for inflation to continue toward the 2% goal. we expect headline cpi to have risen 0.1% in january and the

annual rate to slip to 3.0%. we retain our baseline call that the fomc will initiate a 25 basis point rate in the may meeting followed by three more thing to five basis point cuts. pooja, are there any signs at all that are of a concern to you that the just -- might be derailed by the stronger than it's a paid to data kicking off 2024 -- stronger than anticipated data kicking up 2024? pooja: i do see risks building, that could perhaps jeopardize the smooth disinflation we have seen the past few months. activity in the u.s. economy has consistently surprised on the upside, be that growth or consumer spending or labor markets but outside of that, there are also some near-term

risks. we have the shipping disruptions in the red sea. it is not very good news as far as small goods inflation is concerned. i think on balance, we like the fed want to see more data to become confident that this disinflation we have seen over the last couple of months continues. annmarie: -- lisa: the likelihood that cpi might be coming down, does that make it more likely that the fed won't cut this year, only cut once? pooja: i would not go as far as saying they won't cut up from what we've heard from them, they basically want to build as inflation continues to what it to percent target. chair powell as well as recent communication from fomc members, they were very clear that they don't want to see better data,

they just want to see more good data. as long as we see this gradual progress down, they should be in a position where they can feel confident of wanting to cut. if the opposite happens and we see risks and it -- and inflation exhilarating, they would want to hold off. lisa: what i find fascinating is this dissonance between consumers and economists who think that right now, policy is too restrictive. the national association of business economics poll that was published today said that more than a fifth of respondents said the current fed policy is too restrictive. that's the most since 2011. do you agree? pooja: there is some truth to that. policy is restricted. that is a lot. as you know, we don't have a very clear estimate of where the neutral rate is, but by

different estimates, it still looks like we are at a place where the interest rates are elevated, they could bite into the economy and maybe there is room for us to start -- especially if the inflation side looks like it is going to be met and it is a reason to keep rates at these levels unless there is a real risk on the inflation side. jonathan: 21% say too restrictive. looking at the labor market alone, we've been at this rate since last summer. how much evidence is there in the labor market that we are too restrictive? pooja: this is a very interesting -- despite the strong labor markets, we've got high interest rates but we also had a labor market that was running so hot. i think a lot of that can be explained by the growth and labor force we saw in 2023.

there was a lot of incoming labor supply -- there was a lot of rebalancing that helped the labor market hold on to its steam, despite the environment. that is what explains why we could see this hot labor market despite an -- despite the kind of interest rates we have had. jonathan: the supply response to the economy has argued lee kept a lid on price pressure in the labor market. that could be a one-off factor. does that continue in the years ahead? pooja: i think we are becoming a little skeptical, the last situation reports really showed

limited evidence of any improvement in the labor supply. if anything, even after adjusting for population estimates, the labor supply was reported to have declined in the last two months. going by that, it does appear that the supply side portion that was helping disinflation is starting to fade out. that said, the cbo last week put out there estimates on gdp growth and underlining that was a key assumption that the favorable supplies side effect of the labor market continues. they are very optimistic that what we have seen in 2023 in terms of incoming labor supply continues. if that pans out, then perhaps we could still get this disinflation story, but we are string to get a little skeptical that that continues. lisa: are we talking about the potential for the fed sort of implicitly accepting a to point something percent inflation rate

-- a two point something inflation rate? pooja: we wrote in the report, there are risks that this rate cut gets pushed out to later in the year. we may get fewer rate cuts in this cycle, at least until such time that we get a fair idea of where the demand is. jonathan: we appreciate your take. pooja sriram, of barclays. tomorrow morning, these the estimates. headline cpi, looking at 2.9%. the previous number, 3.4%. we will talk about that another time. 3.7%, the estimate. lisa: that would be the smallest year-over-year advance going back to april 2021.

progress maybe would not back to levels people want -- maybe not back to levels people want. that is one of the key questions and the other key question is, is it shrink flake and -- shrinkflation? jonathan: we could get into that . multiple he the fed is not comfortable to start cutting just yet. the word abut inflation stabilizing above target, once they start cutting, they don't want to have to start hiking just a few weeks later. lisa: they cut once by 25 basis points, maybe they don't have to again. at this point, sony people say we don't care anymore. just a matter of them having made this pivot -- pivot and let's move on. jonathan: you can see in the market. next hour, the second hour of bloomberg surveillance.

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>> we have seen inflation coming down and that is what investors are looking at. >> our base case is still that we're going to see inflation get back to 2% and remain there. >> the second half of the year is supporting inflation reemerging. >> this is bloomberg

surveillance with jonathan ferro, lisa abramowicz and annmarie hordern. jonathan: good morning. the second hour of bloomberg surveillance begins right now. your equity market on a four-day winning streak, a five week -- a five-day winning streak on the s&p 500. equity futures just about unchanged. another big energy deal. cpi tomorrow morning. bottom of the hour, we talk about an interview with nikki haley. foreign policy front and center over the weekend. lisa: especially given the fact that we seem to be careening toward an election and people don't want to pay attention to it. it it takes all the headlines of people are wondering what is the policy stance we are heading into but is going to frame some of the enthusiasm we are seeing? jonathan: the former president throwing cold water on nato over the weekend. annmarie, at best, this temporarily undermines the collective defense clause of nato.

at worst, the situation is this actively encourages the russian president to carry on pushing forward. annmarie: absolutely. that's why you have a number of foreign policy hawks very concerned given the fact that russia is waging a war in ukraine on nato's doorstep. trump said he was in this meeting, he was more emphatic about over the weekend, he said if russia were to do that, if you were to lincoln underspending, he would quote tell russia to do whatever they want, to those meeting -- to those not meeting those obligations. nikki haley, donald trump over the weekend, was very rude about her husband, saying where is he? biden tweeted, major haley is serving his country. a lot of foreign policy issues in play right now. jonathan: republican senators asked about this over the weekend. rubio says he does not talking normal politician. the thing you've heard a million times. lisa: can you dismiss this as simply rhetoric that is trying

to be fiery? it really speaks to this question that we see in congress. forget what is happening in november. given the fact that trump kind of is pulling the strings behind some of the push pull in the republican party. jonathan: we will deal with that. i did mention that deal in the energy patch. we've had a $60 billion deal between exxon and pioneer, a 53 bullion dollar deal between chevron and hess, oxy purchasing crown rock and then this morning, diamondback energy and endeavor energy getting together. lisa: the largest pure play operator, in the permian basin. efficiency of scale, layoffs, what is that going to look like? my second question, how much is this going to take out some of the debt and all the different energy companies you see all of these tieups. the third question, what's next? have all the big deals been done? is that the case or do we see more down the pipe?

jonathan: the headquarters of both countries are literally a block apart in texas. lisa: i will let midland take that on. jonathan: another cre crisis. equities on the s&p 500, totally unchanged to -- unchanged to kick off the trading week. we are down two basis points. coming up this hour, stuard kaiser of citi. gennadiy goldberg of td securities and republican hopeful nikki haley. we begin with our top stories. stuard kaiser of citi remaining bullish. with very strong growth data as a backdrop, cpi could lead investors into either goldilocks

or overheating camps. let's go straight to it. you got a clear line of sight. you've been telling us how good data is good news for stocks. do you think it is going to continue to be that way? stuard with think it is a good environment for owning equities. what is different now is for a. of -- for a period of time, -- that had people questioning, is that survey data forward and we need to be concerned about that? i think you are getting a very clean strong positive on the growth side of the equation. if we were to get an upside surprise on cpi, folks might say is this thing really overheating and then do we have to price cuts out instead of pushing them out? that'll be a key takeaway from the date of this week. jonathan: i think that got people concerned. is it sufficient to tip the

scale one way or another tomorrow morning. stuart: what the fed told you is the inflation we've seen over the last six months is enough to justify cutting. if it is steady as she goes, than the fed wants to be cutting rates this year. unless we get something off the radar a little bit, we should be continuing on the path we are on, which is strong growth data and the fed is like me to cut at some point. lisa: you just flirted with good news is bad news. basically the risk of overheating, then what? is that negative for stocks? stuart: overheat? honestly, no. this is a nominal growth asset. we are of the view that if rates cuts are getting priced out because growth data is strong, then you want to remain long equity risks. there are certain areas of the market, certain tradespeople have on that are much more sensitive to that rate cut pricing. you can have a period or

small-cap equities got beat up in january and the s&p 500 was still up. there are pockets of the market that are still sensitive to the rhetoric but at the index level we are still comfortable. lisa: talking about market-based bets, market-weighted s&p 500 is the best bet right now, at a time where it is hard to understand when that rotation is going to be triggered? stuart: you are trying to get me into trouble. from our perspective, we still like s&p. we've never been comfortable going down to small-cap. with thicket has more growth and interest rate risk. earnings season kind of drove this home. we are seeing a broadening out of the profit -- profit ability of the s&p -- profitability of the s&p. in our view, coming at a earnings, the story is going to be that the s&p is going to grow 10% plus. eight sectors will have positive growth and that allows you to kind of own a broader variety of s&p stocks. jonathan: if you are stripping at the big muscle of big tech,

beyond big tech, you mentioned a bunch of sectors. can you identify a couple where you are super constructive? stuart: the difference between equal weight and cap waited s&p's more industrials or less tech. as much as we don't want to fade that tech trade, if you are arguing for broadening, you need to see health care in particular and you need to see industrials dissipate as well. health care is easier. coming off the covid stuff. industrials will be a test case. i think those are two of the key sectors that will be in play. jonathan: how complicated is that now? stuart: financials are a complicated trade. we are less concerned with large cap financials. it is that small-cap regional banks trade that has come under pressure. a lot of folks were in that trade similar to iw when before that rate -- iwn before that rates cuts story. then you had the new york unity

bank news. if you are a macro investor, investing in regional banks for growth and interest rates and you get a credit risk surprise, i'm not going to be modeling these balance sheets bottom up so i need to be more cautious. large-cap banks, i think that trade can still work. regional banks, we've never been super excited. it is not surprising that people are being cautious but large-cap, ok, regionals, you want to be careful. lisa: the idea of stocks is the new bond, but there is the sort of question as they start to do more dividend payouts and a lot of corporate executives start to engage in greater shire -- share buybacks. at what point is this increasingly a dividend play akin to a bond that you're actually getting the potential for 6% yield? stuart: if i was a bond, i would want to be a stock. i think you've got it backwards. the dividends are really coming up as interesting.

meta got a lot of people's attention. they introduced a small yield dividend. that increase the s&p 500 evident by almost $.60 by itself. the dividend story is coming into play, particularly with yields lower. people are looking at equities and wondering where can i replicate that cash yield? jonathan: what do you think of the jeff bezos's school of thought, offloading $2 million of amazon shares last week? stuart: maybe it should pay a dividend. jonathan: the first time he sold a stock since 2021. stuart: maybe he wanted to do the super bowl and taylor swift the same weekend and that takes cash. jonathan: stuart will stick with us. here are the scores for you on the s&p 500. totally unchanged. cpi tomorrow morning. the two-year down a couple of basis points. 10 year, down about two basis

points. here is your bloomberg brief with dani burger. dani: u.s. defense secretary lloyd austin has been hospitalized for the second time in a month. the pentagon chief was admitted sunday with an apparent bladder issue. the deputy defense secretary has taken over the secretary's functions and duties. the health scare comes weeks after austin was criticized for failing to disclose that he had been hospitalized on new year's day for complications from prostate cancer surgery. devon back energy will by endeavor energy, a deal valued at $26 billion. the company will fund the deal through shares and $8 million in cash. the deal marks the latest wave of consolidations in the energy sector after exxon and chevron made major acquisitions over the last two months. monday might be a drag on productivity. around 60 million people will still -- will skip work today,

while a third will be less productive than usual. some solutions to the super bowl flew involve having the match played on saturday or delayed a week to line up with the presidents' day holiday. jonathan: i still don't know why it is not delayed. just delay it a weekend and then you can have monday off anyway. lisa: i think people just sort of assume. it's like chinese new year. carnival in brazil. jonathan: i think i was one of two people that was watching the golf on tv. everyone else is watching football. up next, israel launching more airstrikes in rafah. >> victory is within reach. it has to be understood. victory will be the best thing that will happen not only for israel but for the palestinians

themselves. i can't see a future for the palestinians or peace in the middle east if hamas is victorious. jonathan: that conversation is coming up next. this is bloomberg. ♪ at ameriprise financial our advice is personalized based on your goals, whatever they may be. all that planning has paid off. looks like you can make this work. we can make this work. and the feeling of confidence that comes from our advice... i can make this work. that seems to be universal. i can make this work. i can make this work. no wonder more than 9 out of 10 clients are likely to recommend us. because advice worth listening to is advice worth talking about. ameriprise financial.

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jonathan: republican provincial candidate nikki haley -- president shall candidate nikki haley -- presidential candidate nikki haley about 15 minutes away on bloomberg surveillance. totally unchanged on the s&p 500. crude is lower. under surveillance, israel launching more airstrikes in rafah. >> those who say that under no circumstances should we enter

rafah are basically saying lose the war and keep -- and keep hamas there. victory is within reach. victory will be the best thing that will happen not only for israel but for the palestinians themselves. i can't see a future for the palestinians or peace in the middle east if hamas is victorious. jonathan: israel launching additional airstrikes in rafah, despite pushback from world leaders. present biden urging netanyahu to do more to protect civilian saying quote, a military operation in rafah should not proceed without a credible and execute a plan. the eu expressing concerns, saying resuming negotiations to free hostages and's fit -- and suspend hostilities is the only way to avert bloodshed. the israeli leader says that we are very close to victory. victory is within sight. do you agree with that? >> if you judge victory by the three rules of the israeli

defense force in the first few days of october which is to destroy hamas's military infrastructure, i think it is fair to say the israelis are not on the verge of what you and i would consider a conventional victory. what they managed to do, provided a huge show of support for a beleaguered prime minister to give him additional incentive, pushback against president biden and i think it demonstrates his view that the longer the israelis can operate in rafah, the reader the chances they will destroy hamas's battalions and perhaps even free some hostages. annmarie: president biden wants to see a credible and executable plan for the safety of those

palestinians who have taken refuge in rafah. how does israel do this without harming civilians? last night we have already seen that is not possible. aaron: you are dealing with gaza, roughly twice the size of district of columbia with a population density of 20,000 humans per square mile. you know have 1.4 million humans sandwiched in an eighth of the area of gaza, and a population density of anywhere from 120,000 humans per square mile. it is hard to imagine the israelis evacuating 1.4 million people. they seem to believe there is an area west of rafah, roughly four miles along the coast. i've been there, it's about six miles long. i don't think that's going to answer the middle. it's clear the israelis are pressing hamas and we will see. the cia director is going to

cairo to resume negotiations. maybe hamas will be under pressure for prisoner release by don't pick it is with the prime minister wants. that's going to involve very painful concessions which could strain his right-wing coalition. annmarie: where does this live -- leave egypt? how had risk is the 1979 peace treaty between egypt and israel, given the fact that if israel were to do this, they would have a tremendous amount of troops on that border which would technically break the pact? aaron: the egyptians have threatened publicly to suspend the treaty. the egyptians said it is clear they do not want a large number of palestinians as refugees or regular citizens being pushed in. it is something the egyptian government is not want any part in.

hamas began as an offshoot of the egyptian brotherhood. the israelis are going to have to make a pretty important calculation here. whether or not they are prepared to risk u.s. relations with israel and certainly egyptian relations, if the -- if they mount a massive campaign in rafah. lisa: i'm curious how you would view it. do you think it has been successful? where has it fallen short? aaron: we have to accept one basic troop -- truth that is so obvious it escapes people. the two major combatants, israel and hamas have driven this conflict from the beginning. they determine the trajectory. they determine whether it is going to intensify or de-escalate. the role of external actors even the united states is important,

but i'm not sure the u.s. is capable of fundamentally altering the conflict. with both and hamas and israel, for hamas it is clearly existential but on the israeli side, this is a core national interest and despite the fact that you have the most right-wing government in israel's history, the majority of the public shares -- i think the axis of resistance is backed by iran, a pro-iranian militia taking advantage of israel in gaza to score points and to make trouble where they can. i don't think there is a solution for the regionalization of this conflict. the objective is to prevent, if the u.s. can, a major regional war which would lead to a direct

confrontation between israel and iran, ballistic missiles, direct attacks on iranian territories, the gulf states would be involved, you would see plunging financial markets, rising oil prices. i'm not predicting we can get there but it is a concern and it is to be avoided at all costs. jonathan: it is certainly the concern. we have to leave it there. aaron david miller. what could happen to markets? this is the story. the weekend of october 7, terrorist attacks in israel. crude closed that weekend $82.7 9. $76 on crude this morning. lisa: people came on and set us they could see oil at $100 a barrel. u.s. production has overwhelmed any potential shortfalls anywhere else. the goal of everyone is to avoid

a larger conflict. everyone keeps saying that. if you start to back out, it seems like the chances of some sort of cessation of shipments of oil seem somewhat remote. over the weekend and on friday, there was a pop in oil prices and there was a thought that the u.s. could take greater action in sanctioning iran. jonathan: stuart kaiser of citi is with us. how insulated are u.s. markets from the conflict taking place overseas? stuart: i think a lot of investors in the u.s. are saying once the price of oil rises meaningfully, i will compartmentalize tort is going on. if he were to see oil rise in the 80's or 90's, people will have to do a process of going back and reading the headlines and maybe they were not paying attention and those headlines are not going to look friendly. for now, it has been treated as an oil trade -- i think people

want to keep them at arms length. annmarie: i always come back to the question of how low would oil be if there was none of this happening right now. stuart: it's a great question. there was a period of time immediately after the invasion where you saw oil all the tilt he was quite high. a lot of that has come back out. it is possible with the u.s. producing, that we will have lower oil prices if not for what is going on. the price of oil is at a level that most people are saying is manageable for the economy. that is how we are proceeding. lisa: and always make me scratch my head when people say there was a lot of geopolitical risk that we have to price and. how? we are talking abut a potential war in the middle east, a potential calling -- a potential contentious provincial contest -- presidential contest. stuart: people seem more concerned with the situation in china than the middle east. technically speaking you do get some risk priced in.

i think what people are doing right now is that got some sort of deep middle east tail risk and otherwise they are operating under normal conditions. what people realize last year is that you have -- is that if you obsess over the risks, you stay out of the market and the potential that the market will run away from you. jonathan: europe is a fantastic example of that. plenty of reasons to be concerned about europe. war taking place in ukraine, a slowdown in china. let's talk about how wrong we all are about everything. have i told you how much china would disappoint reopening, how much they would under deliver the stimulus 70 people anticipated which had the dax up 20% year-to-date last year. lisa: it does not really comply with these macro ideas, which is the reason why people are kind of in this blaze.

doesn't it feel like people are kind of in a bit of a malaise right now? stuart: john obviously did not buy the dax last year. i think the market is still working through some scar tissue from what happened the last couple of years and the inflation spike. it is deathly cap people out of the markets or in the markets that are very conservative. jonathan: stuart kaiser of citi, good to see you. coming up, republican presidential candidate nikki haley as she continues challenging front-runner donald trump for the nomination. that conversation just around the corner. yields are a little bit lower on a 10 year, down two basis points. this is bloomberg. ♪ but it's so much more than that. with gusto, paychecks are deposited in just a few clicks. gusto calculates and files your payroll taxes automatically.

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jonathan: we are about two hours away from the opening bell in new york city. totally unchanged on the s&p. unchanged on the nasdaq as well. here is the politics. donald trump on the cusp of clinching the gop nomination after wins in iowa and new hampshire. nikki haley looking to close the gap in her home state of south carolina. the former u.s. ambassador joins us now. thank you for catching up with bloomberg this morning. i'd like to go straight to some of the polls because of think you find yourself in a peculiar position. head-to-head with the sitting

president, you dominate him. within your own party, you are struggling. the latest poll from the washington post shows 58% of south carolina voters support trump compared to 32% for you. my question would be how much daylight is there between what your party wants and what you think is good for it? nikki: first of all, i'm proud of what we've done. we had 14 people in the race. we've defeated a dozen. i've got one more to catch up to. everyone said we wouldn't be able to do it. we started with 2% in iowa and we got up to 20%. we went to new hampshire and got 43% of the vote. we have increased 25 points in the last three weeks. this race is still very much moving. we're going to continue to close that gap in south carolina, as we head to michigan and super tuesday. 70% of americans don't want to see a trump-biden rematch. i'm pushing through to make sure they have a voice. that is what we have to do.

you've got a decision whether to keep more of the same or whether to go in a new direction. more the same is not just joe biden. more of the same is donald trump. we have to stop the chaos, stop the division. we have to get our domestic issues on track. we have to get our national security on track. we've got to get the american families back on track. jonathan: let's kick off with some foreign policy. you voiced opposition to trump's remarks over nato over the weekend. i'm struggling to find a handful of republican senators who agree with you. are there any who think he is not popular? nikki: it is not to go and blame the voters. not to go and blame the american people. i've always said it is important for joe biden and congress to tell the american people why they should care, to give them the other side. you don't hear that. the other side is that nato has been a 75 year success story. we've not had a war in the region. russia has never invaded a nato country.

they've invaded georgia, ukraine, pulled ova. -- moldova. the last thing we are going to do is side with a thug. putin kills his opponents. he has arrested -- you has been sitting in jail for doing journalism. this is a man who has wanted to destroy america and defeat america for years. i debt with russia every single day. it's a mistake for trump to side with putin over our allies. we need friends after 9/11. we better a memory that. it takes a friend to get a friend. annmarie: i'm sure you've seen the comments from the likes of lindsey graham and marco rubio. when it comes to nato, do you feel like you are out of step with members of your own party? nikki: the goal is never to follow the polls. the goal is to make sure you communicate what is right.

we need to make sure that we have an alliance that is strong. our whole goal is to prevent war. that's the main thing. look at russia right now. the reason people should care about ukraine is because it's a pro-american freedom loving country. listen to what putin said. he said once he takes ukraine, poland and the baltics our next. those are nato countries. that immediately puts america at war. this is about preventing war. this is about bringing more friends in, not pushing friends away. donald trump doesn't get that. that is what will -- that is what will creep us into war. our goal is to not go and blame the american people for feeling the way they do. it's to make sure we get our message out on why they should care and how this is in the best interest of america. for those politicians who are refusing to say that, that's a disservice to the people they serve. annmarie: if the goal is to bring more friends in, it would you agree president biden has done a good job expanding the alliance? nikki: i think yes, he

understands the importance of nato but he doesn't understand the importance of preventing war. he could have prevented putin going into ukraine. all this wouldn't have happened if we did not have the debacle in afghanistan. we left the air force base in the middle of the night without telling our allies who stood shoulder to shoulder with us for decades because we asked them to be there. think about what that told our friends. more importantly, thick about what that said to our enemies. no surprise that putin went and invaded ukraine. no surprise that we are seeing iran push terrorist proxies around the world. no surprise that hamas invaded israel. no surprise that china is doing intimidation over taiwan. they see the u.s. as weak and they don't trust it and the fact that we are watching joe biden in decline is not helping that. russia, china and iran are watching every day, the decline of joe biden. this is bigger than a party.

this is about the fact that we have to look out for the national interests of our country. that is when you put all of this aside and say what do we need? we don't need 280-year-old candidates running for president. we need someone who can serve eight years, disciplined, strong, no volatility, no drama, no vindictiveness, just get the job done. annmarie: when it comes to mental acuity, i know you want to make a standard that they have to take these tests. you said you're willing to take these tests. do you expect biden or trump to take a mental acuity test before november? nikki: i expect that if you look at the fact -- this is just a fact. there is a reason pilots can't fly after the age of 65. there is a reason you have to get out of the military after limited age. there are a lot of industries that do that because it is fact, you are in decline. look at joe biden two years ago. very different than what you see today.

look at donald trump in 2016. very different than what you see today. donald trump the other day went on 3, 4 times saying i should have had security at the capitol on january 6. i never had a job in d.c. i was never in charge of security. he is confused. i don't care if you do mental competency tests for 50 and up these are people making decisions on our national security. these are people making decisions on the future of our economy. we need to know they are at the top of their game. this is not about whether you like them or they hold the baby well. this is about the fact that we have serious issues in our country. our country is in disarray and the world is on fire and we can't go through four more years of chaos. lisa: you point out a number of gaffes from former president trump and current president biden. at the same time, they are still beating you in the polls. even when it comes to handling the economy, you are trailing biden. why is that?

nikki:ifyou look at the general election polls, you see that i do defeat biden by almost 17 points. you can look at the marquette poll that came out last week. i defeat biden in wisconsin by 15 points. trump doesn't defeat biden and we have to look at the fact that if we go in all the swing states, i defeat biden and if i win by double digits, that means you go into d.c. with a mandate, a mandate to stop the wasteful spending and get our economy back on track, to get our kids reading again and go back to the basics in education, a mandate to secure our borders with no more excuses, a mandate for law and order in our cities and a mandate of a stronger america that prevents wars that we can all be proud of. that's the goal of where we are trying to go. we've got to get past this partisan, him or him. both of those men, you look at it, whether it is these court cases where they had national security documents they shouldn't have had.

if you've ever had a job that dealt with any sort of security documents, you know that they are handled with extreme care. the fact that both of these men were so arrogant to have that, those documents dragging around behind them or in a garage tells you this is more about them than the american people. we've got to get this back on the american people and stop getting it on these two men who are refusing to give up their power. jonathan: we can focus on that right now. you mentioned the economy. last summer you spoke to this network about ways to combat pricing debt. my colleague asked you how would you -- your answer, any candidate that says they are not going to touch entitlements, they will go into office and leave america bankrupt. one option you offered which change retirement age to reflect life expectancy. your original answer is now part of trump campaign ads.

is that still something you want to do? nikki: that is not what i said. what i said is we should not ever take away from those who have invested in and those who have been promised. america should keep their promises. i said we should go and change the rules for those in their 20's. that's the problem. like my kids. for them we should change the retirement age to life expectancy instead of cost-of-living increases. we should increase is based on inflation. we should cap the benefits on the mega-wealthy and we should expand medicare advantage plans. what donald trump wants to do, he does not want to touch it so that when social security goes bankrupt in 10 years, everyone gets a 24% cut across the board. that's not how you handle a problem. the thing you do is you get in front of the problem. when we make those changes, that is when you start focusing on what it takes to make sure not only does everyone who's paid in keep what they get, but you make sure that our kids will actually

have something when the time comes for them as well. we have to take that seriously. we have to stop having congress raid the social security accounts. right now they are raiding all of those accounts instead of stopping wasteful spending. stop the spending, stop the borrowing, stop the pet projects. annmarie: do you still think 65 is way too low when it comes to retirement? nikki: i think it depends. we need look -- we need to look at the numbers and see where it should be. right now we do know the people are living longer. what the age should be depends but for everyone that has paid into the system, the age is 65. that will stay 65. for those in their 20's, that is where we will have to look and say what is the right age? we can solve this problem. people don't have to live in fear that they are going to lose their social security, but we need to be honest with them. communicate to them that social security will go bankrupt in 10 years, medicare will go bankrupt

in eight. let them know that we will find a way to make sure they keep what they have to we will have to make changes going forward so that we can start to make sure these things are solvent. lisa: just changing some of the respective 20-year-olds is not necessarily going to change the equation financially in terms of making social security more sustainable. what else could you do in the near term to make this sustainable? nikki: right now, joe biden and donald trump are saying they are not going to do anything which means you will have a 24% cap -- 24% cut in 10 years. at least i'm willing to do something about it, i'm willing to tell the american people the truth that there is a problem and we are going to fix it. you also start with cutting out the wasteful spending that has happened from republicans and democrats. we saw that $2.2 trillion covert stimulus bill that passed with no account ability, that has no expended welfare that has left us with 89 americans on medicaid, 40 trillion americans

on food stamps. that's a third of our country. instead of americans doubling down and trying to make something right, they open a pet projects in earmarks come up pushing through 7000 of them last year. you've got to stop that. we are going to take as many programs in the federal government as we can and pass them down to the state level. that will dramatically reduce the size of the federal government, but it will empower people on the ground. think education, welfare, health care, mental health. when you cut those strings and allow that to go down to the people, you're reducing the size of the bloated government we have. everyone loves to talk abut how great the economy was under donald trump. it seemed great, but at what cost? he put us $8 trillion in debt in just four years. joe biden doubled down and put us even more in debt. but is not how you fix the economy. that is how you leave -- leave

younger generations in a situation they will never pull out of. annmarie: donald trump is talking about heavily tariffing chinese goods. do you see this as a viable way to raise money? nikki: absolutely not. all that does is raises taxes on american families and small businesses we need to be taking care of. it is ludicrous that he wants to go and raise those tariffs to everything we import. that's going to affect american families in anything from baby strollers to appliances. every american family will see at least a $2800 increase in their taxes. not only that, the only does he want to cut social security by 24% in 10 years, he wanted to raise the gas tax by $.25 per gallon in 2018. he doesn't understand the value of a taxpayer dollar. he doesn't understand that you don't go in debt, you don't tax the american people, you don't go and take away -- take care of big corporations. you take care of small

businesses and american families by making sure they have more cash to spend. that's been what is lost not only in donald trump but in joe biden and every member of congress. jonathan: given that you consider that a tariff on china is a tax on american consumers, would you consider repealing existing tariffs on chinese imports? nikki: china is different. trump wants to do tariffs across from every country. china we have to deal with differently. china has been preparing for war with us for years. that is not an exaggeration. they've bought 400,000 acres of u.s. soil, most recently near an air force base where our most sensitive drone data is. they are stealing research and spreading chinese knupp -- chinese propaganda. i have chinese police stations throughout our country. a chinese spy balloon was doing surveillance over our country,

now connected with a u.s. internet company sending surveillance to china. they are building up their military and threatening america. we look at china, look at it through a national security lens. if china pulled the rug out from under us tomorrow, would we be ready? think about what happened during covid. everyone was told to wear a mask. who made the masks? china did. everyone was told to take a covid test. made in china. going to the drugstores right now, all the medications are made in china. what do we do to change that narrative, to make sure the american people are not dependent on china, but we move that trait either to where we make it in america or we go and make it with our allies and our friends. annmarie: if you think that neither candidate who are the front runners is a good option and could potentially be harmful for this country, would you consider an independent run if you don't win the republican nomination? nikki: i am a republican.

we can win as a republican. we are closing the gap in south carolina. we are on a bus to her now where anywhere and everywhere, you will see the numbers are very different. we have a country to save. we have one chance to get it right. we've got to listen to 70% of the american people that don't want trump and biden. you don't fix democrat chaos with republican chaos. you look at the fact that biden has had all of this diminished capacity. democrats better start looking for another candidate. my production is they will. look at donald trump, look at the losses we had just this last week. he lost the bill on the border, he lost immunity for his court cases where he spent 50 my and dollars in campaign contributions on personal court cases. the rnc is broke. the rnc party chair lost her job. donald trump has his fingerprints on all of that.

there is no way republicans defeat joe biden or democrats with chaos like that. we have to get rid of, both of them, get a new generational leader and get america back on track. jonathan: i expected that plug somewhere. one further question. the threshold for you to stay in this race after south carolina. you've been transparent about that. has that changed? nikki: not changed at all. we feel the intensity of people coming out to vote that have never voted before. we feel the fear the people have about the fact that this is where it could end. think about what everyone is saying. the republicans tried to push me out and say donald trump needed to be the presumptive nominee. if i were to get out today, that would be the longest general election race in history. we don't do coronations in america. we allow the american people to vote. we will go into south carolina, we will close that gap, we will

go into michigan and super tuesday. this is about making sure americans have a choice. in a general election, americans are given the choice. in a primary, americans make their choice. jonathan: we look forward to catching up with you after the people of south carolina make their choice. nikki haley, thank you, the former u.s. ambassador and presidential hopeful for the republicans. annmarie: she's going to have to get that bus out all over south carolina because she is trailing trump by 30 points. you see it in poll after poll, americans don't want a rematch of 2020. jonathan: i think it is a really peculiar position to be in, the dominate the sitting president and then to be so far behind in her home state against the former president. lisa: which is why it is interesting to me that she is still a loyal republican despite the fact that the party is basically rejecting her. jonathan: you asked the

question, will you make an independent run and she said no, she is a republican. are you the republican the party has become? we've got the ticket quick commercial break. we will continue this conversation. equities on the s&p 500 totally unchanged. this is bloomberg. ♪ [falcon screech] [ominous background sounds] hyah! sheriff!

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jonathan: live from new york city, good morning. equities unchanged on the s&p 500. equities going absolutely nowhere. treasury yields touching year-to-date highs. >> the underlying dynamic points to a higher yield. we wouldn't be surprised to see a test at .450. the hyatt last year was 5%. do we go north of 2 -- do we go

north of 4.50? jonathan: investors question whether the economy will require as many cuts as the market is pricing in. gennadiy of td securities -- gennadiy of gold -- gennadiy goldberg of td securities. while the march meeting is not complete discarded, chair powell all the close the door on the possibility. we continue to judge the may fomc meeting as the most likely for the fed to start easing. gennadiy goldberg joins us now with more. let's talk about why it might not be june or later. gennadiy: generally, i don't think they particularly care. if you ask powell in reality, do you care whether it is may, june or july, he will give you a quizzical look and say we don't care as long as we start. they know -- we know they have to start relatively soon because rates are quite high. you'll probably see some over tightening if nothing else changes. you will publish see a cutting

cycle start in may. they should have enough evidence specifically on inflation and that is the key here, the inflation side. lisa: i keep going back to this, at the fed doesn't cut rates at all this year, you could see equities eking out a gain. -- essentially good news is good news, regardless of what the fed does. gennadiy: i kind of thinking gets me nervous. everyone is quite nervous, quite expectant of either we get good news or we get good news with the fed rate cuts. the problem is no one isn't dissipating downside risks. if you do see the economy slow down in the fed is refusing to cut rates, that could be a toxic scenario. if you are seeing the economy do ok, perhaps you can see stocks eke out a gain. higher movements have been driven by expectations for rate cuts. lisa: you are saying people have

not priced in the idea of rate cuts due to actual weakness. do you think that is a possibility, something you are sniffing out? gennadiy: i think so. if you are thinking rate cuts because of a harder landing, that is not a positive story. what you are seeing right now is every single investor pricing in a soft landing which gets me quite nervous. recent data has been solid but what we know is things like labor market data are fairly lanky. they know that the longer that real rates stay high, the more likely you are to see a harder landing. jonathan: joan at 50 basis points of cuts expected by q1. let can't just be an inflation call. gennadiy: we are looking for the economy to slow down. the timing is getting difficult just because of the numbers you have seen in payrolls in december and january. right now we are debating whether that is likely later in

the year and i think the problem is markets have been thinking about this for some time, basically trying to figure out when the economy is going to slow down, whether we get that slaw flat -- soft landing or not. jonathan: clearly you are on the other of 4.50. gennadiy: i would love 4.50. i think most investors at this point are looking for 425 to 450. i've been talking to clients and that seems to be the general consensus. you definitely go along at 450 which is why we are going to struggle to get there. we will probably stop short because people are going to be adding at 425. jonathan: gennadiy, good to see you. thank you. gennadiy goldberg of td securities. in the third hour of bloomberg surveillance. that and a whole lot more. live from new york city.

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>> the fed has all the evidence

they need to cut or stay put. >> it is a question of when. >> there is no hurry for cuts anytime soon. >> talking about the resiliency of. the this is "bloomberg surveillance" with jonathan ferro, lisa abramowicz and annmarie hordern. jonathan: good morning, i'm jonathan ferro. your equity market totally unchanged, five weeks of gains on the s&p for 14 weeks out of 15. this 20 market has rallied, just amazing to see it continue going to cpi tomorrow morning. lisa: climbing above 5000 or maybe limping above and i think maybe that is the way to put it because it is not exactly as if this assumption of enthusiastic

scream from equity investors. this is "the magnificent seven" crushing it in terms of profitability and everyone else kind of carrying along behind them. jonathan: the fact we are even limping forward is impressive. yields up last night by more than 11 basis points. another double-digit gain on the front end of the yield curve off the back of really robust data. ultimately, it won't lead to derailing the disinflationary progress we've made over the last six months. if the last point that gets a little bit more fragile. he was basically saying the cpi print tomorrow and the one afterwards could tip the scale in either direction. lisa: given the fact that people have a base case of this goldilocks but the overheating part might just take front and center. the issue, if the fed delays federate cuts simply because there is too much strength, that is a good thing for risk assets.

that is what we hear from person after person. if the fed cuts rates more aggressively because of true weakness and that comes with some of the inflation that some people expect, that is a recipe that as a whole lot harder. jonathan: if td is right that we are going to get 250 points of cuts between may and the first quarter of next year, surely that is a story of much softer growth. lisa: which is something that approximately nobody is betting on. this is the key, how much enthusiasm and base case have people baked into the cake? jonathan: cpi tomorrow morning, yet the latest poll for the race to become the republican nominee in the election later this year. the washington post poll shows 50% of south carolina voters for trump, 32% for the former u.n. ambassador nikki haley. annmarie, in her home state.

we caught up with nikki haley about 15, 20 minutes ago. i think we asked basically 15 different versions of it, how much daylight is therebetween what your party wants and what you think it needs? annmarie: there's a lot of daylight because she is struggling to get the pace as trump continues to have this absolute hold, and then you look at nato. something she is very comfortable discussing, and when you hear what some senders are saying after the former president came out over the weekend and said if you are delinquent and/or a country that says russia rolled in, i would tell russia to do whatever the hell they want with you, lindsey graham said i don't even know why you were asking me about this, this is what trump does. marco rubio said this is how trump communicates. she is equating what trump is talking about as more of this soft language on putin, who she called in our interview a thug. jonathan: the former president's comments speak to the increasing

presence for isolationism. record 51% of republican voters favor greater isolationism in u.s. foreign policy. lisa, that number is climbing. once again in some ways nikki haley finding herself at a sink with where the party is headed. lisa: running as a general election candidate in an election that really still is run by the parties that have different factions and different majorities raise the question why is she continuing in that party if it is essentially rejecting her to mark she said she is going to continue with that party, but this is the issue. how do you run as a general election candidate at a time when you're not going to get chosen as your party nominee? jonathan: this is how we are going into the opening bell, about one hour 25 minutes away. equity features totally unchanged, yields down about three basis points or so.

coming up this hour, why january cpi report to be the last of the inflation print matthew bartlett on the 2024 gop race, and why he sees an increasing chance of a hard landing in the u.s. economy. that is coming up a little bit later. the top story, the s&p 500 hitting a record high ahead of tomorrow's cpi risk to tomorrow's cpi report actually lies a downside, however we are starting to see some price pressures pick up in february. it's too early to say for sure but it could be that the january date is the last month of better-than-expected elation news certainly recent data on wages and services prices paid could cause increased concerns. for now, it likes -- looks like the good times can continue to roll. let's get into it and talk about the expectations last year looking out for this year. you were talking about a

stronger economy. why was that when many others are looking for that deceleration perhaps toward recession? >> because i think people underestimated the u.s. consumer. people underestimated the level of excess savings. they underestimated the power of the u.s. mortgage market with 30 year fixed rate mortgages. i think they also underestimated the impact of demographics on the labor market. we have a shortage of workers and we are seeing that coming. wages. homeowners are not really impacted by higher rates because they got fixed rate mortgages. you had excess savings still from the pandemic running out, but still there. then you have this labor market were we still see tightness. jonathan: you didn't underestimate how resilient this economy would be. ultimately, other people did. are you underestimating how resilient this equity market might be in the face of that? >> i was, i think, because my

view last year to some extent was the economy is going to be better, that is not going to be cutting as much, and that is bad for equities. where we got into over the last month or two and certainly this year is we are pushing back to start the rate cuts, we are not removing the. there is still this belief that we are going to get a series of rate cuts, they are just going to come later, but they are coming later because the economy is stronger. that is a good place to be for risk assets. better economic data, we still got the prospect of rate cuts coming up but it nation is coming down. that is the perfect scenario and that is what we are seeing so far this year. lisa: is risk small caps? >> sophia the equity outperformer's, it is actually flat this year. in november december, we did start to see the broader market go up, that coincided with longer rates coming down. when long and rates go up, it

becomes a nag seven story rather than a broader market story. november, december were great as rates came down, and when we are going up, it is flat. lisa: so what are you betting on, are you going heavily into the u.s., in particular the s&p 500? >> i think it continues. inflation news is going to be ok for now. growth news is going to continue to be good. no one is really worried the fed are going to start hiking again. we are going to get the prospect of rate cuts out there. second half of the year it becomes tricky. first half i think we are fine. second half of the year i start to worry. that pressure in the labor market is still there. i worry about the housing market. we keep expecting a we are going to see the inflation impulse from shelter come down. the housing market is picking back up. we have an inventory problem in the u.s..

mortgage rates have started to come down a bit. we are seeing on the weekly application for people who were on the sideline for last years are coming back and get people who have locked-in the origin the percent were in the pandemic are not moving so we have an inventory problem. i lori that shelter is going to be a positive impulse for inflation the second half of the year. lisa: i'm struck, julian emanuel road over the weekend. i remain invest defensively. valuations can run further, yet momentum markets and without running. when you talk about the end of momentum, you're talking about a very different scenario than goldberg was talking about with this in the economy. you're talking about unexpected strength and we inflation. how do you hedge against that type of scenario given that the polls are so different from one another in terms of outcomes? >> it's difficult, i actually think you play it through short duration. i agree, i think you mentioned earlier 4.5% on 10 year.

i think we do get there on 10 years. so i would be short duration here. that fits with the story of better economic growth pushing out the rate cuts. the inflation does come back more meaningfully in a think you're going to see that curve steepen up. i would be short duration here. i think we see 4.5% before midyear. jonathan: everyone is talking up this war of demand. no one wanted it, now apparently everyone wants it. do you see at the same way, or do you see this market just swinging back to a report in october, when people start to see yields go higher. they don't come in, they are running the other direction. >> it's all very well disable to get the 4.5 i'm definitely going to be buying and then you get a 4.5, the pace is actually strong, inflation data might be coming back. what is the mike tyson quote, everyone has got a plan until they get hit in the face?

i will buy it when we get there, because then you might say four and three quarters. jonathan: that is a right hook, all right. he is right. i think we are basically on the same page here. the psychology of markets, get to five and climbing and everyone is like, no thank you. you dropped a 4.58 you're dropping down toward 4%, everyone is like yes, give me 4.50. but his point, if you're backing up to 4.50, inflation pressures are still sticking, maybe even five around the corner. lisa: it is a question of momentum on the other side, but i love how this is phrased. markets are the only place where when it is on sale, you don't want it and when it is on sale, -- expensive, you want to pile in. especially given the fact that higher interest expense actually begets more problems because it makes it harder for the u.s. to pay it back.

and we care about supply, or is this something people it was the put on the back burner? if the narrative shifts, akp going for a long time. jonathan: the equity market is like a used car salesman. when it cuts too much, you start to think if there's something wrong with it? totally unchanged, let's get you an update on stories elsewhere this morning. >> is launched a series of airstrikes on the city of rafael in the southern gaza strip early monday. israeli military says the overnight mission freaked two hostages. the strikes came after president biden urged benjamin netanyahu to do more to protect civilians. over one million palestinians have fled since the start of the war. that is about half of the total gaza population. president biden called out major snack brent overstreet inflation ahead of the super bowl. he didn't name specific companies or offer a solution to hold them accountable for selling product at a higher price. >> some companies are trying to

play fast one by shrinking the products little by little and hoping you will notice. give me a break. the american public is being played for suckers. i'm calling on companies to put a stop to this. lisa: even as inflation appears to be slowly, the economy remains a top issue for many americans heading into the election. germany's market for office buildings and suffering its sharpest drop in two decades. prices tumble 13% in the fourth quarter. higher financing costs and slower return to office contributed to the downturn. the outlook isn't much better with further decline projected for the start of the year. jonathan: thank you. up next, nikki haley firing back at trump's nato comments. >> nato has been a 75 year success story. we have not had war in the region and if you look, russia has never invaded a nato country. i dealt with russia every single day. it is a mistake for trump to side with putin over our allies. jonathan: that conversation up

next.

jonathan: one hour 15 minutes from the opening bell, equities unchanged for much of the last two hours on the s&p 500, which is amazing, really. all-time highs for cpi just around the corner, sort of treading water. under surveillance this morning, nikki haley firing back at trump's nato comments. >> nato has been a 75 year success story. we have not had war in the region and if you look, russia has never invaded a native country. do we want nato to pay more? of course we do, but the last thing we are going to do is side with a thug. i dealt with russia every single

day. it is a mistake for trump to side with putin over our allies. jonathan: haley looking to gain ground on the former president in her home state of south carolina. head of that primary on the 24th, the latest polls showing her trailing donald trump i around 30 points. we're joined now for more. great to catch up. in some ways, nikki haley and the campaign over there seem like they have got it sequenced back to front. they seem to be doing really well on the national stage against biden and with the poorly in their own party against trump, and you can't get to one without securing the other. how do they turn this around? >> first off, amazing interview. that was more substantive than i think we see from trump or biden in the past nine months. all around the political reality to the really critical issues of the domestic situation as well as matters of war and peace internationally.

nikki haley is espousing what seems to be a very appealing message to the majority of americans. u.s. leadership, fiscal stability, free trade, economic growth. yet she seems incredibly out of line and out of touch where the base primary voter is, and that is a problem. >> you look at the republican party, trump has a grip on the base. why is the remainder, given the fact that we have everyone dropping out, you think of desantis, pence, why was she unable to get the remainder of that party in the primary? >> it's a great question, anne-marie. i would just say that donald trump has been a political identity of the base for the better part of a decade now, and they like the attitude, they like the swagger of the former president. i think there was probably maybe a year ago some questions around his electability. even trump voters are happy to admit that he steps on himself

quite often. what if we see the past six months? head-to-head polling where former president trump is beating karin president biden can many of the swing states. that has done nothing but embolden his message, and his voters, and really make this just have a psychological effect that the general election rematch is a foregone conclusion. >> she's not just out of step with members of party, she almost in the last 24 hours feels like she is in step with the biden administration. when trump made those comments, andrew bait came out and sent encouraging invasions of our closest allies by murderous regimes is appalling and unhinged. she is calling putin a thug and is very much against what trump is saying when it comes to nato. at the same time trump also went after her husband and president biden came out and defended her. how odd is that to see? a republican who wants to get the nominee is actually more than line -- more in line in

this moment with the president from the other party. >> it's an interesting dynamic you have. she absolutely went after president biden, talking about his mental faculties, saying that he is simply too old, but you are right, she also went after president trump on issues related to nato, issues where she actually disagrees with him on critical issues. so i think maybe it was lisa that asked the last question, is this a third-party candidate? it is very murky as she tries to get through a republican primary to get the nomination, beating former president trump in order to get the current president biden. it is such a topsy-turvy dynamic i'm not sure she is now getting a wind. lisa: as a republican who has worked in different presidential

campaigns, how much is what we are seeing an indictment of the primary process given the fact that someone who could win a general election can't win the primary? >> precisely. i think both parties are struggling with that question. whoever can crack the notion of the primary process, not putting forth one of the more extreme candidates, but rather putting forth one of the most electable and reasonable candidates will ultimately rule in the united states for the foreseeable future. it is challenging doing that. make no mistake. 2016, the democratic party had a plethora of progressive candidates. bernie sanders, elizabeth warren. ultimately they did not go with a bleeding liberal heart and instead, went with joe biden who they thought was the most moderate, electable candidate. to their credit, they won the presidency. now, obviously president biden has challengers both as a person

and maybe even some more progressive policies that make that a little more difficult, yet the republican seems absolutely happy to proceed with donald trump. they are convinced that they will win with him or they are happy to lose with him. they are not going anywhere. simply put, republicans like trump. both parties seem to be digging in the, while a majority of americans seem to be tuning out to possibly both of them. lisa: you have a sense of what is driving people to trump? what keeps them there rather than broadening out? >> it is a mix of policy and personality, make no mistake. you just heard nikki haley espouse what is a traditional republican youth those, which is u.s. leadership around the world which is free trade, which is entitlement reform. donald trump in a 2016 said no more stupid wars, by the way it

is called fair trade not free trade, you're not going to touch medicare and medicaid social security, and he won. that was still a shock to the conservative youth those as we move forward in this town and across the country. and then you have the personality where the republican party, the conservative base voter, it is not about a policy or set of principles, it is about the attitude, the swagger, the fighting back. and they appreciate that notion. mitt romney in the past, a boy scout and was treated poorly. they put forth other candidates, so why not send trump? it seems as if the winning in 2016 is enough of a sugar high that will keep them going, even though in subsequent years, 2018, 2020, is ghost in 2022 has only brought doom and gloom for republicans. jonathan: you mentioned biden winning the primary. this explore that one step further. it wasn't for senator clyburn,

there are many who believe it may well have been a bernie sanders. it wasn't as if there was some genius thought in the party to put forward someone that might win on the national stage. is there a senator clyburn in the republican party that could turn this around? >> no, not at all. quite the opposite. anything that smells of establishment, anything that smells of d.c., anything that smells of trying to push voters away from where they are only backfires. there is no cavalry coming. we are a party that is intent on the grassroots, that is very cranky, that is not in a good mood. you look at even some of the cooler heads here in this town, whether it is senator ron make, you even look at mike gallagher, a young conservative chairman of the china select committee doing important, critical bipartisan work. just last week he said he

refuses to impeach mayorkas. very challenging times out there. >> there is not a senator clyburn, and i think this is an important point. the reason only a handful or not a handful of you only -- this is the antiestablishment movement that a former president seems to lead. annmarie: which is why when you see defense hawks shrug it off you realize how far this party has come. jonathan: about 24 hours four minutes away.

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♪ jonathan: equity futures on the s&p 500, equities unchanged. nasdaq: nowhere as well. the rest of the small caps doing ok. the s&p 500 has been doing better than ok. five-week winning streak on the s&p 500. in fact, make it 14 weeks at a 15 that this equity market has been rallying area so basically since the end of october, just one direction, equities higher. until recently, last week, yields higher by more than double digits, down by a couple

of basis points this morning. so far, so good. this equity market has handled it pretty decently. >> a lot of people say the fed has made the pivot and is going to be cutting rates, it is just a matter of when. and that is enough to keep this going, even if people prolong the first rate cut, when it might actually happen. jonathan: unless that data disrupts and derails disinflationary trends. that is going to be the issue at play. the wages story, i think we are ready to put that to one side until you get more of it and more of it. then the story starts to change. so far, so good. good news, good news. you get a couple of reports in the wrong direction and you tip the scales the other way. lisa: does that hurt the most? it didn't make and that bearish. that thing you do get overheating.

that is not necessarily a negative for equity investors. it really raises the question whether the fed can cut at all this year, which is the reason i thought it was really interesting that bank of america was talking about how even with no rate cuts this year you can still seeing a rally in the equity market. jonathan: he called a reverse goldilocks. lisa: gogo, goldilocks and reverse goldilocks. jonathan: a lot of thought went into short -- i'm sure. basically unchanged, bond yields coming in. negative by 0.15%. your top stories, israel launching more airstrikes in the southern gaza city. benjamin netanyahu vowing to continue israel's military action despite growing international scrutiny. the white house saying yesterday that president biden told netanyahu not to proceed without a credible and executable plan for the safety and support of civilians.

some growing distance between those two leaders. annmarie: a lot of growing distance when you consider biden's previous remarks in public where he said some of what netanyahu has done has been over the top a lot of concern from this administration over protecting civilians, which we know given israel's assault on gaza, more than one million palestinians are now in offer. this is where they sought refuge and now they want to make a humanitarian corridor going to the north, but where does egypt come into play? there is a peace treaty between egypt and israel since 1979 and if there's too many israeli military personnel of that border, that could break apart a peace treaty that has been in place since the late 70's. jonathan: without a doubt this is a really delicate situation but in many ways the market is be insulated from the all. crude production in america at record highs, down by 1%, wti down a similar amount. wti crude this morning, 76.12.

diamondback energy will by fellow oil and gas producer endeavor energy resources in a $26 billion cash deal. shareholders will own 60.5% of the company when the deal closes, and endeavor shareholders will hold the rest. the agreement is just the latest in a string of massive deals in the u.s. energy space. we see the sun, chevron, oxley all closing deals. lisa: we're talking $60 billion for exxon. now we have $26 billion, notably in stock and cash, but i do find it interesting, how much further can this go, and what is the purpose? is this because frankly, you've already drilled the drillable places? this is about maximizing production, maximizing efficiency and paying big dividends. >> some of this finance with equity, not raising debt. lisa: this is exactly what we've

been hearing, that this is the golden goose for a lot of credit investors, that if you get smaller companies that ended getting taken out, you're going to buy out the debt, there's not going to be more debt issue because it is not attracting financing costs. i find that pretty compelling. jonathan: investors looking ahead to january cpi. bloomberg economics expecting overall inflation to have fallen to 2.9% last month marking the first reading below 3% since march 2021. core cpi is expected to jump year-over-year, and if data comes in line with expectations, it would support a disinflationary trend that will determine the timing and size of the fed expected rate cuts this year. chief economist at apollo global management joins us now for more. we were all balled up on soft landing goldilocks talk. how close are we to changing that story? >> i think it is very ironic that we came in 2020 three, everyone said recession, recession.

2024, everyone is saying soft landing, soft landing. if you look at the component of inflation, yes, maybe in the next month or two we could still have the disinflationary trend in place, but we are beginning to see more upside pressure on housing, more upside pressure on wages on a number of indicators and more broadly, an economy that generally is doing quite well because of the easing of financial conditions and therefore because of the labor market. jonathan: what was your base case at the start of the year, and has it changed yet? >> i didn't expect that this would be a soft landing but the worries that will not have a soft landing. a higher than 50% chance that we have a high landing, or no landing. the fragile soft landings almost the most unlikely scenario because we now have a situation where if we had a labor market that is still getting stronger because of easing financial conditions, no wonder the employment numbers were so good in january when companies now are issuing at the highest level in literally decades.

high-yield issuance was very strong, ipo is beginning to wake up. of course you should expect to see the labor market better and therefore wage inflation doing better. lisa: we did just get another deal announced. mergers are really picking up, but here is my question. at one point greater inflation would really create a problem for treasuries and yields going higher, when we people start to care about the deficit again? you've been pointing out of the supply is just dramatic, that there are $10 trillion of u.s. treasuries coming to the market this year and that there really are not the same number of fires to set them up so when does that became a problem considering that the auction cap in pretty good so far? >> the interesting thing is that it used to be that we had yield insensitive buyers which was china, people who really didn't care too much about what the level of u.s. treasuries were trading at. but now we've shifted to yield-sensitive fires including u.s. households. we have pension risk transfer

and a lot on the insurance side. broadly speaking, domestically be have a lot sensitive to interest rate investors, that basically means that the change in the narrative could become very bonding. particularly to think that fed is cutting rates, what does that mean if those buyers of rates have been much more yield sensitive than what we had for a long time? the change in the firebase of treasuries is absolutely beginning to play a role. lisa: so why hasn't it? people say because the retail investor is coming in. is there a threshold at which the retail investor gets spooked, stop spying, and then it is a self-fulfilling prophecy were higher yields begets more selling, not buying? >> when the fed began to raise rates, you saw households begin to buy more treasuries. you would expect to see if the fed begins to cut rates, households are potentially begin to lose appetite. think about all the money and money market neutral funds. a lot of that money probably would begin to find its way

elsewhere, the discussion is, if they're still appetite by duration? >> the idea that the fed may not cut rates as quickly or as much as people are expecting raises another kind of question around commercial real estate. do you end up with a more systemic problem if rates remain higher for longer in a way that most people are not getting at? >> let's be totally clear, higher cost of capital is fighting harder and harder every single day in a number of different areas in one area is that if we do have rates higher for longer because of the inflation problem not going away, that will continue to create more and more risk of financial stability issues down the road including for commercial real estate. 11 different asset classes it

really is page one in your finance textbook. a longer that persists, the more it bites harder and harder not only on corporate, but also on consumers. that is why the effects of monetary policy will continue to weigh on the outcome but it is different as a function of who has most leverage, who is most vulnerable, who has the lowest coverage ratios? jonathan: i'm biased, but i am a big fan of your research, always have been. and weekend reading list. it is like having a professor over at apollo who gives you a reading list for the weekend. delinquencies is something you pushed out this weekend. how does that stack up with this theory that the economy is doing really well, it is resilient, it might push out this disinflationary story at the time -- same time we are seeing delinquencies climb? >> there is a spectrum both for consumers and for firms, namely those that are most impacted.

>> those companies in this houses that had fewer savings that had lower fica scores, those are also the ones getting impacted. there is a spectrum of those being impacted by fed hikes. value investors, most importantly, and venture capital, tech growth, some passive health care and consumer retailer, they're the ones with most leverage, seeing the biggest impact. jonathan that almost directly speak to some of the dissatisfaction in terms of some segments of society they have with economy in this country. inflation pressures are still very real for some of those families as well. the inflation star that i think we've accumulated since 2020, you don't just leave behind because inflation drops to 2%, 3%. the president is out there talking about shrink inflation.

i want to talk about the economics of that. when you hear things like this is down to price gouging, this is down to greed, what is your reaction to that? >> generally speaking it is not surprising those who have been those that are the most vulnerable to interest rates going up but the sources of inflation are either supply chain chains getting screwed up during the pandemic, not getting things delivered, or demand where we had a lot of fiscal stimulus that was way more than any other country in the world. all that meant that we did get a lot of inflation. both of high interest rates, but also higher inflation and with the new york fed data just showed also now if that is younger households, households in their 20's and 30's that are falling behind on paying their credit card bills and their auto bills at the fastest pace since 2008, so that also tells you got the impact is that younger households of course had more debt because when you're young and buy a house, you have more debt.

that means those who have more debt are the ones that are seeing the negative impact of rates going up. jonathan: they think they are sick and tired of being told how good this economy is. lisa: which is why we heard about shrinkflation which you very skillfully avoided. jonathan: in this white house are struggling to connect with those people pretty clearly. >> it raises this question of just what people are getting it right at a time where it seems like it is moving in the right direction and people are still feeling those higher bills. >> i'm not sure if you connect with them by going on tiktok. what did you make of that? >> more and more you look at the stats, the youth are pulling their news not from mainstream media, not even from twitter, they are actually getting news clips from tiktok. there was a backdoor the white house used to do, still probably is doing within a given interview to someone who is very prolific on tiktok and have that person put out the interview

because they couldn't have the president have his own tiktok and now the campaign is saying we traditionally spiegel, we are going to do it. >> just to be clear, the president signed a law which banned tiktok the nonfederal devices. anne-marie: campaign is different. jonathan: it's banned from being on federal devices like campaign is ok? lisa: it's the difference between policy and politics because ultimately you have people saying that they are concerned about the data and a chinese company and where that data goes, then you have been using that same platform to try to reach voters because that is what they are on. to me, this really highlights the route we are going to be in for a long time. >> this often that the space between good politics and good policy. you are aborting that one, and for good reason. good to see you. let's get you an update on stories elsewhere this morning. here is your bloomberg breeze. >> u.s. defense secretary lloyd

auster has been hospitalized for the second time in a month. the pentagon chief was admitted to walter reed late sunday with an apparent bladder issue. his deputy has taken over functions and duties. it comes weeks after awesomeness criticized for failing to disclose that he had been hospitalized on your state for complications from prostate cancer surgery. citi is facing you demand a change the way it measured the risk of its trading partners. u.s. regulators sent to the bank three notices last year, telling it to address the matter in the coming months. citi told reuters that meeting expectations was a top priority while making steady progress simplifying and modernizing our bank. president joe biden will host jordan's king abdullah at the white house today. the two are expected to discuss latest military operations in the port city in efforts to secure the release of israeli hostages held in gaza. the visit also comes after last month's deadly attacks on u.s. forces in jordan from

iran-backed militia. that is your bloomberg breeze. jonathan: up next, a record-breaking super bowl. >> it has been an incredible season for the nfl on cbs. we set a high watermark for ratings since the property returned in 1998. on sunday, we set an all-time viewing number with any luck. jonathan: that is coming up next live from new york. this is bloomberg. hey! sarah! if you had to choose would you listen to elevator music all day or deal with payroll compliance? payroll compliance, for sure. gusto automatically calculates and files my taxes for me. hold up, compliance? easier? choose payroll compliance without the ups and downs.

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$76 on wti. under surveillance this morning, a record-breaking super bowl. >> it's been an incredible season on cbs. we set a high watermark for ratings since the property returned in 1998. we set a high watermark for ad sales for a super bowl and it is looking like on sunday, we will set an all-time viewing number, with any luck. >> hear the latest, the chief speeding the san francisco 49ers in super bowl 58, becoming the first back-to-back champions in 19 years. viewing figures are not out but it is forecast to be the most watched super bowl in history. brands still spending $7 million per commercial as more fans cut cable and had to streaming. joining us now is brian weser, can we just get into that briefly? the usefulness of spending that much money on a 30 a secondd in the super bowl, how big is it still?

>> it still massive. fox last year generated about $600 million in revenue and presumably paramount will see more than that. from a marketing perspective, advertising is not about whether something is good or bad. for the sake of reaching a massive audience, getting this watercooler affect, building a campaign, building brands, it really is not comparable to the super bowl. jonathan: tv is losing viewers because when you look at some of the most-watched things in the last 12 months or so, it is dominated by sports. sports seems to be the last place we have these appointments to view where advertisers want to be because they know that is where eyeballs convene and get together at exactly the same time. how unique is that in american football now vs., say, everything else? >> it really is american football over everything else for the united states in particular. it dominates the industry right

now, and that is why this whole announcement last week from disney and foxx and warner is so potentially important, because that is already a situation where from an advertising perspective, you really value the fact that you get casual viewers. that is the only way you make this so important as an advertising vehicle. get people who don't necessarily want to pay all the cart for that sports program, and the more that it shifts streaming world, the harder it will be to reach audiences and the more valuable it will become for advertisers. lisa: what was advertised and how you view that with entertainment, if the service contract 6 million subscribers, ak charge at least $40 a month. they are discussing a price that is $50 per month according to people familiar with the matter. is that the price range you are looking at>

>> it's not clear, but reports suggest something along those lines. i'm just kind of mystified how they are going to thread the needle and find an audience that cares enough about sports to pay that much but isn't already subscribing to pay-tv. in other words, people who are already traditional pay-tv subscribers and that is going to diminish the value of the overall ecosystem. that said, as i pointed out, when hulu was created it was considered cloudco because any the concerns around dysfunction of the joint venture. there is the risk that this becomes 2.0. lisa: i'm curious about what you thought about the advertisements. what was your big takeaway? mine was personally just about movies being advertised, that they all paid so much money and said go look at the trailer. what was your take away? >> i didn't even watch the game,

i was too busy watching other things. but i did see the sarah b ad and i thought it was quite amusing. i think this fine line of balancing celebrity and grand, and that was a really good example for a l'oreal product, but it made the point with the brand is trying to do. they are going to make that brand more of a household name than before. annmarie: beth mgm spent $50 million on the ad. what is the bang further buck on something >> like that? >>if all you're doing is spending $7 million and you think that is enough, it is not. you getting a lot of attention but keep in mind millions of dollars typically go into the whole process of reading a campaign and this should be the start of a campaign, not the end of the.

in some categories, services in particular, it could be 40%, 50% of revenue has to be devoted to advertising and marketing. spending $50 million isn't anything. jonathan: how much revenue from a luxury player is on marketing? >> it's actually very high for some. something like 30% of the total revenue. what is really interesting is you look at lvmh, they don't spend much in paid advertising through traditional medium. they do a lot of social, and event-related marketing, but they don't spend a lot on tv. jonathan: talking about a very unique opportunity to market whatever product or service you are trying to sell. how was that stacking up elsewhere? >> it is growing quite helpfully

everywhere at the industry level, but television is not. television probably declined by single-digit levels in the fourth quarter and expect something similar to 2024. meanwhile, total advertising is growing in the mid-sigel digits excluding political advertising. digital advertising and amazon, tiktok are the primary beneficiaries. jonathan: costing $7 million. i think that a $7 million for a 30 second spot. lisa: i guess if you're capturing how the eyeballs, 49% of american households watch the super bowl. if it is that kind of proportion, it. i think it is fair to say it is going to be more than that. lisa: i wonder how many people were actually watching the game. honestly, how many people

actually watch the game? jonathan: there's the game, there's the commercial break, the halftime, and then you got taylor swift. i know everyone is sick to death of hearing the taylor swift effect but you have to imagine it is pretty real. lisa: there were a couple of advertisers that would not have been there if it were not for the female base. she was only shown for 55 seconds. jonathan: how much is that? like $15 million? something like that. people will work that out for you. coming up tomorrow, jim delta, apollo asset management copresident. chief economist at wells fargo and david kelly, all joining us tomorrow morning for cpi tuesday. that data, 8:30 eastern time. opening bell this morning, equities just a little bit softer after a record-breaking street continues on friday.

closing north of 5k. more still to come potentially. from new york, this is bloomberg.

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>> you have heard the saying, don't fight the fed. we are nervous. the air is getting thin. "the open" starts right now. announcer: everything you need to get set for the start of u.s. trading, this is bloomberg "the open" with jonathan ferro. ♪