>> the inflation problem is not going away. it will create risk of financial stability issues down the road. >> i do see this building that could jeopardize disinflation. >> every single investor pricing in a soft landing gets me quite nervous. >> all we need is a tiny with of less dovish data and that would already be enough to said pain across asset classes. >> if we were going to get a surprise on cpi then folks would

say is this really overheating? >> this is "bloomberg surveillance" with jonathan ferro, lisa abramowicz, and in reordered. jonathan: this is bloomberg surveillance alongside lisa abramowicz together with annmarie hordern. typically we start this program talking about inflation but you do not want to miss the lisa abramowicz rant on schools in new york city. they save, new yorkers. -- stay safe, new yorkers. parts of new jersey and pennsylvania could see as much as 12 inches. lisa: how are you going to do this? jonathan: i am going to keep going. remote learning, thoughts? lisa: it is adding insult to

injury as a parents. having your kids home is a pain in the neck. then to have to oversee them and their learning and get on their case for not doing their homework assignments while they were looking out the window hoping to go sledding and feeling caged in and arguing with each other is too much. jonathan: as far as they are concerned to they believe it is a snow day or do they believe they have to learn something? lisa: they think they have 10 minutes of logging on and taking attendance and they can go outside. i assume they have work they can get done and i assume is the parent i have to oversee it. i think you give a snow day or you do not. this half half makes it more of a burden for the parents. we will keep you updated with lisa's opinion and get real updates with dani burger. stay safe if you are commuting this morning. let's turn to the inflation data. we are looking for a two handle on cpi year-over-year on the

headline. 2.9% is the estimate. 3.4% is the previous read. we're looking for something closer to 4%. lisa: you are looking at year-over-year going in below 3% for the first time going back to 2021. the actual components, the broadening out, that seems to be the key phrase for a lot of fed officials. the idea is is it just products? is it just food and energy or is there something further under the hood? jonathan: what is the risk we stabilized north of the 2% inflation target? than the political spin will begin. i will argue the political spin started before the super bowl when the president released a building. annmarie: the president released a video from his campaign account. yesterday the president went after corporations, calling it greedflation and shrinkflation.

he is not mentioning brands by name. he did mention snickers but he was wrong that the snickers bar did not shrink. every time we get the cpi report he says more work needs to be done, but treasury secretary janet yellen once to declare victory on the soft landing. jonathan: is this the standard of the conversation in d.c.? lisa: that we are talking about snickers bars? on one hand we are talking about the snickers bars are not big enough -- how do you message something that is good progress but people are still feeling the two year cumulative inflation. the key is to talk about where progress needs to happen and treat people like they are smart and they understand what they are talking about. jonathan: there is a bill working its way through the senate at 6:00 in the morning down in washington, d.c. you told me they have turned up

in gym clothes. annmarie: some of them are being woken up to get back to the senate floor to vote on this and it looks like they have the numbers but the boat is still open. they will be passing $95 billion in the senate for israel, taiwan, and ukraine. last night the last thing i read was speaker johnson saying this is not going to happen in the house. in the absence of having received any border policy change the house will work its own will on these important matters. lisa: i rant about schools any rant about what the senators where. jonathan: i was just curious. it was the first thing annmarie told me. i think it is disrespectful to the office. s&p futures -.4%. in the bond market down about a basis points. 4.1696.

coming up this hour, chris verrone of strategas. norman roule, and jennifer lee. we begin with our top story. the equity rally cooling ahead of this morning's cpi print. chris verrone saying even if we get a pullback in equities, the floor is high. trends remain overwhelmingly positive for a 50 day support on the s&p 500 at roughly 4770 at long-term worst-case 4600. we got the bank of america fund manager survey early. i will go through the most crowded trades. long magnificent seven, 61% of respondent short china, along japan, long cash. overwhelmingly, long magnificent

seven. how concentrated are some of the actions you've seen over the last month or so? chris: it is one-sided in terms of leadership. this idea that it said stocks working the entire market is misleading. you have the small caps right now. give the s&p making two year highs. it has been a high bar. the good news is the other stuff , the other 490 stocks, they are not going down in price. when you look at the health of the market, you still have to argue it is pretty broad. it is well participated. you could get a seasonal or sentiment induced pullback. as we wrote 4600 or 4650 would be worst-case in terms of any seasonal weakness. jonathan: when we spoke to you closer to the start of the year you were talking up financials into 2024.

what is the state of play now after that speedbump with nyc be a few weeks ago? chris: it is remarkable how quickly people want to go back to the imagery of last february and last march. i think it looks different this time around. as the banks and the regionals have sold off, what you have not seen at all is any stress in financial credit. that is a very big difference from a year ago when you begin to see stress permeate through the financial system through the avenue of credit. the other thing you have not seen, unlike last year when the regionals came under pressure, you begin to see this persistent bid for the markets more defensive corners. you saw it with staples and utilities. if i will evaluate the correction we have seen in the regional or the real estate names or the banks over the last three or four weeks, i look to it as viable.

the trends are positive under the surface. at a minimum let's give them a leash to respond to this oversold condition. lisa: buying regionals or buying financials? jonathan: yesterday -- chris: yesterday was a great example for softness at the top of the market. use our regionals and banks acted very well off of support. i think you will get a good oversold response. the questionable parts of the market. the regionals, the rates. when you look at the banks more broadly capital market stocks begin to act well. consumer finance names continue to trade well. american express and capital one and allied financial. it is often perceived as one of the weaker parts of financials trade quite well. jonathan: at this point -- lisa: at this point it is sort of a test.

to have a downside that is not that down is fairly bullish but the upside being driven by small caps is next level. we were talking about how the consolidation we have seen is far from the doom and gloom people talk about. is that enough to get in and bet on the broadening out that has yet to happen? chris: i think the story that the broadening out is yet to happen is misleading. we are only six weeks from some of the best readings we have seen in 60 or 70 years worth of data. december 14 you had more small-cap stocks make a high. the only crime they have committed in the ensuing six weeks is consolidating that move. this idea that the broadening never happened is misleading. i think it began to happen in the fourth quarter. we have paused. all signs point to re-engaging. yesterday was really interesting. the s&p finished lower but you had more stocks up than the

highest rating we have had all year. internally we looked good, you have the small caps start to break out. let's give this more leash to re-expand. jonathan: is because the excitement is elsewhere. we are looking at stocks that have doubled in three days and tripled since the ipo. nvidia is flying again. i want to talk about the consumer just briefly. we have cpi later this morning. in a couple of days we have retail sales. if you look at staples versus discretionary, what is the signal you take? chris: we say we will take the market intuition over our own any day of the week. the market is the best economist i know. the discretionary is a very good barometer for how the market perceives the economy. that made new highs yesterday and sodas transport utilities. all of the respirometer's i would look at to gauge -- all

the risk barometers i would look at are still in good shape. you mentioned to some of the stories are brought. you have a lot of new highs. you have taiwan at new highs. career breaking out. -- korea breaking out. importantly, early signs of capitulation in china, which is interesting to us. jonathan: the most unloved equity market in the world. do you like it enough? chris: peru's the financial times, new york times, the wall street journal you cannot find a bullish word written. you had 82% of the shanghai composite except for the worst part -- something there is changing right now. i would cover your shorts. i would look the price action. look at the breakout in wind. look at the turning down of china. something is happening there.

at a minimum the bears have to cover shorts. jonathan: chris verrone on the most loved equity market on the planet. i will go back over the fund manager survey from bank of america. we're looking at the most crowded trades. long magnificent seven. number two, short chinese equities. lisa: to damian sassower our's point is that a trade, maybe not an investment. something is happening. take a look at mgm. it shows how risk on people are, that they're willing to sate the technicals are so bad it cannot get worse. we will throw a few dollars into that area. jonathan: it is the place where sentiment is rock-bottom. equity futures near session blows, down .4%. let's get update on stories elsewhere. here is the bloomberg brief with dani burger. dani: new york city residents

are born to stay home today. the city is forecast to receive at least eight inches of snow. eric adams closed school. if there were more than 7.3 inches in central park it would be the most since 2022. northern new jersey and eastern pennsylvania could see as much as 12 inches today. former president donald trump has endorsed his daughter-in-law to help lead the republican national committee. former television producer lara trump is married to his son eric. the move would tighten from script on the party. the current chairwoman ronna mcdaniel is in discussions to step down. sunday's super bowl was from from the history books. the first back-to-back win in 19 years and the most viewers.

that is a 7% increase from the previous high, set last year. bedding also set a record with gamblers in nevada waging -- that is your bloomberg brief. jonathan: appreciate it. surprised? lisa: about the record? no. we were all expecting it. jonathan: the taylor swift affect. is that what we are seeing? annmarie: dearly want to talk about her again? jonathan: i want to talk about jim nance of cbssports. absolute legend. lisa: you're talking golf? you're basically saying let's shift gears from the super bowl to talk about golf. jonathan: let's not. up next, president biden pushing for a pause in guys a -- a pause in gaza. pres. biden: the united states

is working on a hostage deal between israel and hamas which would bring sustained calm for at least six weeks. jonathan: that is coming up next. live from new york city. this is bloomberg. ♪

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jonathan: cpi data later this morning. equity futures a little bit softer. negative one third of 1%. down a single basis point. under surveillance, president biden pushing for a pause in gaza. pres. biden: as the king and i discussed today, the united states is working on a hostage deal between israel and hamas which would bring immediate and sustained. of calm to gaza for at least six weeks, which we could then take the time to build something more

enduring. jonathan: president biden pushing for a six weeks pause in fighting between israel and hamas. the meeting amid growing concern about a potential israeli ground offensive in a city were over one million palestinians have fled. king abdullah calling for an end to the war, say we cannot afford an israeli attack on rafah. it is certain to produce another humanitarian catastrophe. joining us is norman roule, former u.s. intelligence official. could we take a step back and look at the original objective of the israeli military, which was to destroy hamas. much progress have they made? norman: that diminishing the significant humanitarian catastrophe of gaza, israel has achieved significant success against the loss -- against hamas.

hamas had five for grades. two in the north have been destroyed. the two in the center have been degraded. the final per grade is located in -- the final brigade is located in rough. -- in rafah. concentration of civilians is why the united states was pushing for a less intense conflict against the remaining leadership. annmarie: how does israel go into rabaa to get rid of the remainder of hamas and make sure they are making sure they are protecting palestinian civilians? norman: they only have two choices. first they undertake a long campaign to degrade the remaining hamas brigade but also to go against the tunnels under rafah. this is where the fighters are hiding.

this would be a long and costly battle. the alternative is to move the civilians out. the problem is there not many places to go. they could send them north again. not a lot of facilities for them in that area. they could work around them. it is very complicated. annmarie: you had the head meeting with bill burns. if they go ahead with a hostage agreement with that mean israel would not go into rafah? norman: israel would say a hostage agreement would delay going into rafah. hamas would push for a lengthy hostage agreement which would allow them to survive and declare victory through survival. if you are hamas survival means victory, and then dominating the postwar environment and in essence restoring a modest domination of gaza and the west bank. lisa: how much are you concerned

about benjamin netanyahu and how much the news reports seem to suggest he is going it alone and defying a lot of biden and what he is saying? does that give you pause? norman: it is a concern but i think prime minister netanyahu does reflect a genuine belief in israel that they cannot sustain another situation where hamas might return and repeat what it did october 7. it is fair to say prime minister netanyahu reflects a hard line of the right wing but it would be unfair to say he is the only person that believes hamas must be destroyed in a new situation in gaza must develop in a two state solution should not be rushed into because that might mean a hamas dominated entity on the israeli border. lisa: there are senators in their pajamas voting on this bill to get aid to ukraine in israel. it is dead in the water because the houses doctoring to bring it.

elon musk talking to senators saying there is no way vladimir putin can use the war in ukraine . what does -- what you make of that? how concerning ms. that? norman: it is concerning. it may be politically popular to deny aid to either party, but providing precision guided missions and strong intelligence to protect civilians and it enables those partners we support to win or sustain their defense. it is as simple as that. if you deny precision guided munitions and intelligence, you lengthen the fight, increase civilian casualties, in you. undermine their will to fight. jonathan: u.s. rhetoric is shifting. private meetings are suggesting joe biden is calling the israeli leader an a-hole three times

separately. that is a shift in rhetoric. may be conveniently from this white house. have you seen a change in policy? norman: no at present. the u.s. continues to flow forward, the cooperation of plosser juice is strong, but the u.s. is appropriately concerned with how the rafah campaign will go. there is nowhere to move this population. if israel conducts a traditional campaign the civilian cost would be enormous with huge political consequences to do guided states and a domestic political component. i do not think israel intends to do that but the concern in the white house is indeed genuine. jonathan: sometimes it is quiet with regards to regional actors. i am thinking of saudi arabia. what you anticipate will happen with them towards the end of the year? are you expecting a shift in their approach to the situation? norman: i do not.

the saudi's will consistently call for a cease-fire, a two state solution with a definite time frame for when that solution must come about, and a situation where the humanitarian aspect of gaza is resolved. there is enormous sensitivity in the arab world to what they see as the daily drumbeat of the death of palestinian men, women, and children. we do not have that same drumbeat in the west. the sallies are not going to shift. jonathan: thank you. good to catch up. former senior u.s. intelligence officials as the president the united states pushes for a six-week pause. can we talk about angry biden and how convenient some of those leaks might be. you think that is more on his mental acuity they want to show him being focused and angry behind the scenes. annmarie: he is very well known to have a temper.

this has been documented since he was vice president. these leaks are from individuals at donor meetings. karine jean-pierre was asked about this and she said she would not elaborate on the presidents private conversations. clearly there is a lot of frustration in the white house but also within the campaign. you see outreach from this administration to go to places like michigan where there are groups saying "abandon biden" that feel he has turned his back on them. jonathan: is a change in rhetoric not a change in policy. the demand for ai helping chip designer arm to double in three days. that conversation is coming up next. live from new york city, this is bloomberg. ♪

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jonathan: cpi report about two hours away. negative on the s&p 500 about one third of 1%. pulling back just a touch on the s&p, snapping a four day winning streak. the last time we had a weekly loss was the first week of this year come then you have to go all the way back to the end of october. that is how good things have been. your equity market pulling back. the two year, 10 year, 30 year shaping up as follows. 4.1618.

two your down almost a single basis point. a quick look at the euro. just a little bit lower. 107.81. positive .1%. u.s. cpi data on deck. bloomberg survey forecast and annual rate of 2.9%. this would be the first three below 3% since march 2021. bloomberg expecting housing and rents and core services to overtake goods as the driver of disinflation. this conversation picked up when we heard from mr. barkin of richmond fed and he talked about the b word. we need to see this brought an out. lisa: i am hopeful but need to see conviction of slowing inflation -- those were his words. how much you see this in that data? it suggests we will. if you don't will that be enough to keep the fed on hold? if we see it brought an out, is

that enough for them to cut in march? is that where our conversation is going? jonathan: just this have the potential -- and it does this have the potential to dip us into a less favorable regime. i will go into that quote from stuart kaiser of citi. lisa: after he came on our show and after he put out that report , citigroup analysts came out and warned of a potential 1998 situation where the fed does cut rates but that is forced to raise them again in a year or two years. how much is stewart talking about exactly that type of environment where you do not kill the beast, it linkers and you end up in a different regime? jonathan: without a doubt that is the scenario some fed officials are clearing. and washington, d.c. the u.s. senate voting to pass a standalone aid package for ukraine in israel. leadership confident the $95

billion will pass today. speaker mike johnson warning it will face opposition in the house, saying "the house will have to continue to work on its own on these important matters." this will fail in the house? annmarie: it will absolutely fail in the house at the moment. speaker johnson already pouring cold water on it. the vote started at 5:15 am and mike johnson said it was dead in the water in the house. i am looking at the vote count. senator cassidy has not voted. we are missing two senators to vote. they have the votes to go through. it does not matter if it passes the senate so it will not be passing the house. jonathan: so we should not be talking about it? annmarie: at some point, potentially, there could be different avenues for some of this aid. there is a lot of bipartisan

support overall for these programs. it is how it gets done. do we decouple them? lisa: what do you have if we have the likes of j.d. vance of ohio saying things like we have to kill this thing and elon musk saying vladimir putin cannot lose? what does that say to our allies, let alone internally? it raises this question of alliances, a question of conviction the u.s. will be there in the same way. jonathan: why we give people who are successful in a very narrow field a voice on everything? on literally everything? if you become highly successful in technology or whatever the business might be, why do we as journalists give them so much oxygen to basically pontificate on everything under the sun? lisa: fairpoint. elon musk was talking to u.s.

congress members. in some ways the business leaders have become ambassadors because politicians have not been and are not representing the business world in the same way as they have traditionally. annmarie: if elon musk was around this table he would tell you he has done more for ukraine than the 49 states given what he has done with starlink and the internet connection. he has his own social media platform. he decided to corral a bunch of republicans who were against this bill and sided with them, and we wrote it up. jonathan: -- the ai boom, nvidia briefly overtook the market share of amazon before settling just shy with the value of $1.79 trillion. investors all in on u.s. tech stocks. investors sing allocation to tech is the highest since 2020.

alex webb joins us for more. would you describe this as an ai frenzy? alex: it certainly looks that way, particular with arm. when arm first became public there was a certain man of skepticism about whether it was really an ai stock. it did not look like it was delivering much value when it came to ai. it seems the market is buying that message given some of the statements made last week. it does not have this direct exposure nvidia might have, but a lot of its chips designs are used to underpin a lot of these specialist chips produced by the likes of nvidia. lisa: you have the unwanted job of trying to label what is real and what is fake. what is overhyped and what has legs. is the suggestion of nai boost the sales enough to justify the

rally we have seen in the arm shares? alex: i would love to pick the investor relations and see if the financed teams of arm's brain right now. they want to get the recognition for what they're doing nai. if the expectations are set too high the risk is you set yourself up for a fall if there is disappointment in the quarters to,. i've spoken to other companies who expressed this sentiment that they want to be recognized for what they are doing. they do not wanted to be overcooked. nvidia is trading 35 times its forward earnings. that is not wildly outside the realm of what some of its peers are doing. the case with arm's it starts to get out of that space. maybe they can deliver. that is not for me to predict. lisa: can we say tesla is out as

these shares surge and tesla is down 20%? alex: in terms of ai? it is fascinating. elon musk is trying to make the case they are nai company. i followed this self-driving space. you never heard about tesla being up there at the top tier of self-driving technologies. you think about waymo. you think about the gm cruise unit. aurora. those guys the top tier. tesla not thought of in the same category. maybe the market is waking up to that. self-driving is not full self-driving. what they brand as full self-driving does not let you go on the roads with your hands off the steering wheel. it seems like that message might be trickling through it only scales within tesla. lisa: the reason i ask is because when we zoom out there is a question of when the ai

boom will trickle out to other companies that will use it to create operational efficiencies. this is something that investors are looking at. can we see the same kind of boost equity valuations, the same kind of booster earnings for other companies outside the traditional text fear -- the traditional tech sphere? are people sniffing that out already or is that a yet to be discovered space? alex: i do not know the answer to that question. there companies that might be well-positioned. if you think about some of these big consultancy firms, they like to talk about the likes of accenture and those guys -- they like to talk about the potential of ai on two france. -- on two fronts. you could do some of the work they have consultants doing and

also they could bring those capabilities into -- their clients firms. does that mean they are nai play? -- does that mean they are an ai play? i do not think so. it is still so early in the evolution. increasingly you will get hyper specialized applications of ai and that is where the opportunities will explode. do not know who those companies are yet. jonathan: alex webb of bloomberg out of london. a sneak peek of the premarket. arm -2.65%. we have been talking about that $95 billion bill going through the senate. senator's up early to pass a $95 billion a bill for ukraine come israel, and taiwan. this is the senate.

you set all morning this will not get through the house. annmarie: major hurdles. you see chuck schumer talking to a very early morning group of senators. it came in 70-29. a number of republicans were in favor of this, bucking the trends we've seen from other republicans following donald trump's lead. you have to think before the senators even woke up and voted on this final passage, they were met with a statement from speaker johnson saying the house will go its own way. jonathan: to undertake that live shot again? what you notice about chuck schumer. suit and tie, ready to go. annmarie: i have an update on what they are wearing. steve dennis told me senator britt appeared to be heading to the gym next. ted cruz wearing a longhorn sweatshirt. lisa: i think it is great they will go work out. be healthy and live long. jonathan: here is your bloomberg brief. dani: president biden is forming

a task force to address the mishandling of classified documents during presidential transitions. the special counsel report found biden kept documents in his possession after he was vice president. white house officials called it a systematic issue affecting both parties. the task force will provide recommendations before the next presidential transition. the international energy agency expects global oil markets to remain comfortable. supply will satisfy demand and keep prices in check. >> in the absence of major geopolitical turmoil for major extreme events, we would expect a comfortable oil market and comfortable air price evolution throughout 2024. dani: iea says world consumption will increase up to 1.3 million barrels a day, a significantly weaker pace than last year.

tiger woods is launching a new brand after ending his long-term deal with nike. he signed a deal with tailor-made golf. they will create an apparel line called sunday rent. finance -- sunday red. financial terms of not been disclosed. that is your bloomberg brief. jonathan: up next, inflation data on deck. >> at some point it will be appropriate for us to lower the federal funds rate. do not see that in the immediate future that i did not want to prejudge what our decisions might be. jonathan: that inflation data two hours away. in the s&p 500, -.4%. in the bond market yields lower. 4.1657. live from new york city, this is bloomberg. ♪

jonathan: stocks slightly down

yesterday. this morning the same game. down about .4% on the s&p. 10 year 4.1637. euro not doing much. 1.0 774. crude the smallest of bounces. $77.42 on wti. inflation data on deck. >> the progress we're making on inflation is very positive. as long as we have continued progress at the current policy rate, i think at some point it will be appropriate for us to lower the federal funds rate. i do not see that in the immediate future and i do not want to prejudge what our decisions might be going forward this year. jonathan: fit officials reiterating it is too soon to change policy with january cpi data dropping and does go hours. the median estimate calling for the headline number to drop

below 3% for the first time in three years. jennifer lee writing "policy and markets will need to wait through mixed messages, but will likely conclude or evidence will be required for the fed to feel comfortable with the plan to start easing midyear." jennifer lee joins us with more. let's start with the evidence these disinflationary trends are broadening out. how much do you see? jennifer: we are seeing some evidence of this broadening out but it is not as brought with what the fed wants to see. this is where the sticky inflation story is still playing out very broadly. this is a story around the world as well, which is why were not seeing central banks coming more broadly quarter. i want to see more evidence of that playing out and being more

comfortable before they can start feeling better and more confident about cutting rates. lisa: when you zoom out there is an existential question, will the fed have the ability to kill the inflation beast? will they end up staying on hold , but facing a researching inflation later this year or next year that causes them to hike rates again? we heard from citigroup's jason williams over the last couple of days where he wrote the market should pricing some risk of future hikes. this cycle could be more akin to the 1998 easing cycle which was short-lived and red to morgue -- and led to more rate hikes. do you agree with that? jennifer: that would be a big problem if they cut a couple times. this is where you can see a big credibility issue playing out at that point. this is what the fed wants to avoid and why they are so hesitant to cut rates too early. we have the market pricing in at

one point almost 100% chance of rate cut in march. thankfully chair powell came out last week or two weeks ago and dismissed that idea almost completely. they are just trying to tell everyone to be patient, chill out, sit back, and watch the data and make sure we are confident. all of those keywords they keep throwing out. confidence and patience inflation is headed towards the 2% target on a sustained asis. this is what they want to see. i do not think a few numbers will cut it. lisa: how much are you getting the sense that specific components are coming down when it comes to inflation enough to be sustainable? do you believe this is a new inflationary cycle that might be deceiving in the idea it truly has been filled? -- has been killed?

jennifer: remember back in the old days when we just looked at headline inflation and now we have to look at all of the various components to make sure that everything should be coming down to 2%. mostly everything has to be headed in that direction. now we're looking at things like the super court, goods and services. goods inflation is coming down quite quickly. services is where things are still sticky. you still the strong u.s. consumer willing to shell out for travel, for concerts, for gambling. there is still a lot of strong demand for services and that is keeping services cpi sticky and that is why the fed will be patient until they are confident things are headed in the right direction. jonathan: the gambling numbers are not. you sense this and the news conference with chairman powell. he told us where the survey was.

the data does need to get better. ultimately we are saying we need to see more of the same thing. this chairman, and maybe some people on the committee as well, are just not comfortable they have seen enough yet, because they're worried about what you've been talking about. they start reducing interest rates and they were problem down the road and they start hiking again. lisa: the problem is people are still getting hired, earning real wages, and spending. we will get airbnb earnings today, we will get others. the same kind of train seems to be prevalent everywhere. how do you get confidence you can kill the inflation beast lowering rates when it does not seem to be all that restrictive? we have not seen the credit tightening you would expect given how much they've raised rates. jonathan: can we talk about the consumer as well? it is not just cpi. it is retail sales.

we have talked to but consumer running on fumes. how strong is the consumer now? jennifer: the consumer is still in pretty decent shape. it goes back to the job market. even though the job market has cooled, we are not seeing job gains of the 500,000 friday. as long as there is still decent demand for jobs or workers come everyone is making a decent wage. that is enough to keep the consumer going. they do not have to spend it all, they can put some aside for a rainy day. that is ok. whatever you're making, you do not have to blow it all right away. that keeps the fundamental support below the u.s. economy going. as long as we continue to rise, job demand is still decent, that will keep the consumer moving forward. lisa: i am struck by the polarization of the people we speak to and the new paradigm. will it be re-inflationary

paradigm or will it be one where we are deceived by the strengthen the economy? early this morning we got small business optimism data and it actually fell the most since the end of 2022. here we are talking about the resurgent demand, this incredible strength. what is the risk from your vantage point we are worried about the wrong thing and it is the deceleration that is more present? jennifer: i am quite worried. whenever i see numbers continuing to be expectations -- look at the last couple of reports. of course i'm always thinking what are we missing, what are the market missing. it all goes back down to the labor market. at some point over 500 basis points of rate hikes is starting to have an impact and not having as much of an impact as one would have imagined during normal times.

these are not normal times. this is why we are stepping for our fed rate cut call, not until the second half of the year. i do not believe we are ever in that march camp. i think june and july is the most likely scenario for the rate cuts to start happening. jonathan: it seems like a lot of economists on wall street coalescing around the same month. it is good to hear from you. jennifer lee of bmo on the cpi data that comes out and about one hour and 36 minutes. cpi data, 2.9% is what we are looking for, down from 3.4%. headline for core 3.7 down from 3.9. month over month figure, .2% is the estimate in our survey. if you talk about the labor market and price pressure, andrew hollenhorst has something to say. "we continue to see a stronger underlying trend of inflation

such as factors as wage inflation continuing to move sideways at 4.5%." this is what jennifer is talking about. lisa: it comes down to the labor market and the labor market is surprising to the upside, whether on numbers were wage growth, or whether it is surprising to the downside in jobless claims. here is the dissidents. yesterday everyone was talking about inflation risk in the new york fed puts out three-year inflation expectations from consumers. it falls to the lowest since 2013. everyone piles into bonds. the russell 2000 rallies. everyone is waiting to coalesce around that. jonathan: chris verrone. we will see the equity market brought amount, take a look at china. when you see that, sentiment is high. lisa: i wonder if that is the bias right now? jonathan: in the next hour, a

stacked lineup. that is coming up in the second hour of "bloomberg surveillance." equity futures -.4% on the s&p 500. in the bond market, yields 4.1637. i looked at the last time we got a cpi print on january 11. the two year closed at 4.24. the 10 year closed at 3.96. yields have shifted higher and this equity market is higher over the same period. lisa: is positive for the right reason. yields have been hired because the growth is so good. we can keep going. jonathan: to sound fed up with this conversation already. lisa: it is not that i'm fed up. we will not get an answer. jonathan: howdy plan to get through 2024 when it is the middle of february and you're already sick of politics, sick

of monetary policy. lisa: give my kids something to do and we can have this rsation. jonathan: the second hour of bloomberg surveillance is up next. ♪

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it does seems that if it is steady as she goes the fed will cut rates this year. we should be in a position where they will be confident to cut. you will probably see a cutting cycle in may. we will see an economy doing well because of the easy of

financial conditions. inflation is coming down and that is the perfect progress scenario. this is bloomberg surveillance with jonathan farrell, lisa abramowitz and ann marie herder and. jonathan: there is a new bar for some fed officials. what they want to see is more data and broadening out of the disinflation story. lisa: there is this idea that if you see factors play into why we are seeing disinflation and codes they will feel more comfortable.

whether they are just trying to placate something or moves the needle, if we get this data and sees shelter and other causes contributing more to disinflation. jonathan: the data has given us pause. i was hoping when the ism prices would click higher. lisa: disinflation has been driven by products not by people going to bars and restaurants because people are getting higher wages. until you see that coming in materially, is this something that is a new paradigm for the people are getting paid more and spending more?

jonathan: i wanted turned to the latest a washington dc, when we talk about price pressure we need to talk about cosby a scope policy. it is another 95 billion bill for foreign aid. annmarie: this is going to ukraine, israel and taiwan but before they even took that photo there was a filibuster all night. we heard from speaker johnson who threw cold water on this idea is that the house is going to go its own way. what you see now and what we discussed with ambassador haley is this where within the republican party with defense hawks who won to send these weapons to ukraine and the

isolationist approach. jonathan: we are just going through the outlook, a little better than anticipated. lisa: people are still buying coke. the estimate was 5.9 and it's a little better than that. when you take a look at the mix, nutrition, juice, dairy were up 6% while water, coffee, tea. jonathan: you alluded to this. lisa: is this the o's a?

people care about their nutrition. jonathan: the stock is barely moving, positive 5.2%. equity futures look like this, negative here on the s&p by .5%. eurodollar up .07. coming up we have jim salter, david ballin . u.s. stocks are towards all-time highs. apollo global management posted a record.

jim, it's good to see you. thank you for coming on, well received by this market. jim: we have a business and an industry that gets better every day as there are more retirees looking towards retirement and do you have an of all the -- evolving banking system. as an industry, it's a secular change. we had a business but hit on all cylinders and all parts of our business, great investor performance, and we did so on a

risk-adjusted basis. jonathan: there is a sentiment out there, apollo is killing it and the banks are struggling. their loss is your when is that how it works? jim: it's a brutally competitive business weather on the banking or asset management side. the competition for market share is brutally competitive but it is a great narrative. there is a much more symbiotic relationship that exists and we are a counterparty of the u.s. institutions. it's not on any one transaction, whether coasts of the broadly syndicated marketer more broadly. these are competitive within our industry and the banks and that

will never change. the financing that takes place, counterparty financing from the large institutions is critical to our business and we provide them opportunities across equity and debt businesses. lisa: in high school when you have two friends that always talk about each other behind their backs but they are polite because they operate in the same circle. morgan stanley is bolstering its private equity portfolio and goldman sachs wants to double the size of its credit business. jim: we are in a competitive industry with them smartest minds but at the end of the day it's about your business model and how you run your business.

there is no doubt there will be firms that will start credit businesses but let's take a step back. private credit is broader than just sponsored by out. it is a great headline product but that is one trillion market where private credit is 40 trillion. with aircraft finance, solar finance, inventory finance that is where we have a competitive tool packs -- box. we have brought our cost of capital down. in you are in the management or distress business in this higher

rate environment people like to buy annuities. that brings sin a lot of long-duration, lower cost capital. lisa: how much has the money that you are talking about been the reason we have not seen the credit cycle people were expecting? jim: i think what is going on right now, equity markets were up 20% and at the end of the year you had defaults approaching 5%. that's a pretty unique characteristic. the strength of this economy has befuddled economist and all of your guest it when you look at the top lots even with the folks

that have the information have missed this. i think you are seeing signs of a hardening of economic conditions coming up. i think the fed has made the right choice. they put themselves in an interesting position where they can communicate volatility with a lot of work left in the gun. it's a much more resilient economy. the u.s. economy is the bulwark of the western world. jonathan: the federal reserve has the ability to respond to negative shocks. of the issuance we have seen so far, this boom is supply and flood of demand is that because

the economy is strong or are we anticipating lower rates? jim: the u.s. consumer has prepared themselves for a higher rate environment. corporate balance sheets are prepared well and when they see financing opportunities don't wait around for perfection and that has been a good lesson. there has been a thoughtful when people see what is going on that there has been a rush and risk on trade. the market has been priced to perfection and every asset class which means it's a good time to issue. for us, we underperform in periods like this. we are low levered. we are in a position where if there are pockets of volatility we are well-positioned.

jonathan: you want to be the liquidity provider. jim: the story that has not been spent on is the issue of market structure the lack of the abilities in the ipo market is fundamentally challenged. this market structure issue has been going on for several years and now more than passive in scale will have profound expectations on how people raise capital. jonathan: you mentioned credit stress, i want to ask you about that. are you seeing pockets of stress? what are you seeing? jim: in a very broad economy

with massive fundamental strength you are seeing situations where companies, poor business plan or way too much that who have not recovered from covid. you see that more in the corporate world. as a consumer the average mortgage is 3.8. we are not seeing the same pain as they have in the u.k. in germany. there has been private equity activity over the past 5-7 years. there are challenges out there. jonathan: jim zelter with this for the next 30, 45 minutes.

here is your bloomberg brief. dani: residence are urged to stay home, they could receive eight inches of snow. 7.3 inches would be the most sense january 2022. areas of new jersey, pennsylvania could see as much is 12 inches. carl icahn disclosed a 9.91 stake behind blackrock and vanguard. the stock dropped 30%. icahn said that he has had talks with management about a board seat. shares of manchester united.

radcliffe said he would purchase the stake allowing investors to swap their holdings for $33 a share which is well above market price. jonathan: up next, investors are looking ahead to cpi. >> i think that growth news will continue to be good. we will keep the prospect of rate cuts out there. jonathan: we are one hour and 15 minutes away from that data. ♪

jonathan: inflation data coming up in just a minute. we are -.41% on the smp. 10 year at 4.15 investors are

looking ahead at the cpi. >> i think growth will continue to be good. we are going to keep the prospect of rate cuts out there and i think we do get 4.5 on the 10 year. that fits a story of better economic growth and pushing out those rate cuts. jonathan: here is the latest, cpi data out and just about an hour. they are hoping the headline number will dip below 3%. size of economic growth and recovery are spreading faster than economists believe possible. david joins us for more.

it is slow and grow becoming the grow and grow? david: we are seeing no slow down. we expected it is not. the consumer has stayed healthy with inflation coming down with real increases in wages starting in november. healthy consumer balance sheets and the big story happening for the consumer's import prices are negative. we are importing at less cost from china and that is rolling through the economy. when you look at the consumer continuing to buy you see consumer confidence in the michigan index. all of this is going against the fact that the fed has kept rates higher for longer and that is

the quick story. things are going better than we thought. jonathan: consensus was bullish and we have pushed out those rate because and yet we are still bullish. have you changed your market call? our market call is more bullish in terms of what the snb could do for the year. -- s&p could do for the year. i think what we are seeing is the market is telling us about what the economy is likely to do over the course of the next six months which will turn out and earnings. we thought it would be up 5% but they could be up six, 7% which is considerably more. it supports higher rates for longer.

is paul said bear becoming bowl and then bowl? at what point does it lead to a resurgence in inflation? david: that is what people are worried about that is least likely to occur. inflation is going to stay moderated. the fact that we have materially increasing labor costs in the economy has normalized after covid. there is no reason to believe inflation will be a bigger problem. lisa: your colleague jason williams wrote the market should price and risk of future hikes. this cycle could be akin to the easing cycle that led to more rate hikes.

are you baking that into expectation? it is a very confusing moment. david: i think the fed is signaling to us they will be graded about not lowering rates quickly but there is no indication that there'd be any recent raise rates. the bigger story is going to be equities in the fact that fewer than half of the equity sectors had positive earnings of this year we think it will be 90% or more in the equity story inability for equities to go higher as earnings become clear is what we have to focus on and there are fewer value parts of our market, indication that

markets are anticipating all we are talking about. jonathan: david balin with us there. nvidia and microsoft, is the fake just going to get bigger? -- is the big just going to get bigger? jim: the impact of the magnificent seven is broader -- higher than the broad index in the manner in which capital formation has happened has changed but the magnificent seven had had a magnificent performance.

if you are not picking those stocks he will underperform. lisa: big companies do better with better performing credit and that is a sweet spot for you? you are confident they will survive in a different way than smaller businesses that don't have the same strength? jim: that is the key to our view of the markets. i have been in high yield since the mid 80's this single be single issue or high-yield bonds , those are dinosaurs of the past. for our business at apollo, we are focusing a big portion of our origination on investment grade quality risk.

when you were concerned about an economic cycle the people of a concerned about since 2016 you wanted to go higher and higher in credit quality. larger companies with less commodities. we went through 2016 and learned a lot of lessons from investing with energy and we will not do that again. jonathan: we will tease that out in just a moment, the ai rally continues. that conversation is up next, this is bloomberg. ♪

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jonathan: live from new york, 60 minutes away from that economic data. we are only down about .43% on the smp. russell is -.4. yields are higher off the back of stronger-than-expected economic data. 30 year four point 36, 10 year

at 4.16. jobless claims were lower than anticipated. lisa: pick your data point, everything is performing better than expected. citigroup surprising, the key question is when does this create economic problems? jonathan: and now there even more bullish? lisa: the bulls are getting buller? jonathan: that's how you want to frame it. lisa: i'm playing around with it. jonathan: who cuts first ecb, federal reserve. the euro positive 1.07 against

the dollar. cpi data is 60 minutes away forecasting an annual breed below 3% since march 2021. bloomberg economics expecting to report less disinflation and court codes. lisa: the broadening out and confidence that this kid can continue -- this can continue. how much is health care, rent, health care? jonathan: and then it gets personal quickly. the fed will tell you what it thinks about it. goolsby will be speaking and then tomorrow bostic, daily,

plenty of fed officials are here to respond to this. lisa: the key question is, what have we learned? jonathan: very little. there was a take away from the last news conference. that chairman powell is trying to herd cats. but they all seem like they're on the same page to me. lisa: what is the threshold that would allow them to cut rates? maybe these broad concepts like confidence and broadening out become subjective and momentary pauses but this is a good point. jonathan: were having a conversation about calving and a couple of months. maybe june, but maybe not.

president biden pushing for a six week pause in the fighting between israel and hamas making his case to the king of jordan. the senate passing 95 billion of aid. annmarie: for national security issues around the world. why the -- while they feel this is the right direction but this is dead on arrival in the house of representatives and mike johnson saying that's for the senate. but he has bill burns in egypt with the head of mossad. jonathan: super bowl setting a

new record for television viewership. 123 million people tuned in, a 7% increase which includes the network and the streaming device paramount plus delivering the most streamed super bowl ever. lisa: i did some field research and there were a lot of hate watchers. they hate that taylor swift. i don't want to get hate mail because the haters want to hate. jonathan: but the nfl is

dominating and figure. lisa: that's why you are having a rush on five bundles. annmarie: imagine if there was an occasion where you can speak 223 really -- 120 3 million viewers. jonathan: why did he skip it? annmarie: there are questions coming out about the president's acuity and they felt this was the wrong message. he was out speaking about the labor market and the inflation is corporate greed, shrink inflation. jonathan: if you could wear of baseball cap with apollo audit

and hang out with travis kelce with that work? jim: it is a first for ray into thinking about connecting our brand with a broader audience. for us, we have a 34 year track record of people think of us and what we used to be as a pe firm and we are a broader platform. jonathan: lisa is laughing because i went from football to golf. jim: i am a buffalo bills fan so it was a tough game for me to watch. jonathan: can we talk about how 401(k)s are going to change as well? how was this all going to change

in the weeks, months, years to come? jim: mark pointed out the irony of saving for 20, 30 years because of the systematic structure demanding liquidity and that liquid is safe and illiquid is risky but that paradigm needs to be challenged. we are talking about market structure and passive and underlying performance of a variety of illiquid alternatives have performed in a robust manner across several cycles. the so-called endowment model has taken advantage of the liquidity structure they don't have to live by so if you have a broad d.c. market with long-term

objectives of retirement income and safety, why are we exposing them to liquid, volatile aspects? lisa: there is a concern that if you have the ability to withdraw and investing in long-term investment it creates a potential for a run. if there is a trigger and people withdraw their cash it can create a spiral? jim: if you're ended d.c. plan you are in daily liquidity funds. that liquidity drain is already in the markets. but we have been careful not to offer daily liquidity products because we know what i get into that asset liability mismatch. the reason annuities have done well is because there is the

longer duration of those vehicles to be able to reinvest versus a savings account that we saw with svb. lisa: in an environment where everyone wants exposure to private assets that there are bad actors that could create for selling? jim: you always have to understand what the weakest competitor may do. but in my career the one that sticks out to me is the u.k. pensions with the ldi crisis, those are long-duration investors which had to sell all of their liability.

i think it is interesting that all of the folks have not gone into a daily liquidity product. if you are a provider of those how you go down that path but we are focused with the discipline of making sure we never get pulled away from the table on a mandate. jonathan: i just want my 401(k) with arm, which has doubled in three days. the winners of the year, nvidia and meta overtaking the market value of amazon briefly. have you called this a frenzy yet? mandeep: all of the stock moves

are not validated by earnings surveillance. you want to see estimates catch up and when there is a 90% move that tells you there is a lot you are paying out for future earnings. who knows what the normalized level of earnings is. with chips, the supply tends to catch up, there is that supply component every r&d resource is developing ship to train models. you are paying for 20 years forward in terms of earnings. lisa: who is behind this kind of move? retail investors who want to get

ahead or fund managers who have been caught off sides? bowl becomes full -- bull becomes bull. mandeep: there is a fear of missing out but it hasn't translated into real revenues. nvidia is showing data center growth. with all the others, where are the real revenues and how long will it take for them to show up in the numbers? everyone is changing that. there is a real kabbalist with the fed funds stock coming down

-- there is a real catalyst. jonathan: the numbers from nvidia are a week from tomorrow. jim: they have to be that the rates because they have set expectations like that for the past three orders. if you're investing in a long-duration asset, how long can you hold this for in the market is not thinking like that. jonathan: here is your bloomberg debrief with danny berger. dani: the latest rally has been driven by the approval of the approval of a spots etf. it remains 19,000 below its

all-time high. u.s. senate approved a 95 billion dollar bill for assistance but now the legislation faces and a battle in the house. senators passed it this morning and republican leaders in the house say president biden needs to take action against border immigration first. tom swazi is a race on bidens policies. jonathan: we always say this, turn out so important. who is it more important for us? annmarie: if you look at the makeup of this district there

are so many voters who are not decided ended business swing district. that is why everyone is focused on it. that's why everyone is focused on the snow. jonathan: turnout, i get it. >> the reason people should care about ukraine is that it is pro-american country but putin said that once he takes ukraine the baltics are next. jonathan: that conversation this next, this is limburg. bloomberg. ♪

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crowdstrike moves faster. crowdstrike. we stop breaches. jonathan: cpi is 42 minutes away. smp is -.4%. 10 year at 4.15.

they are making the case for aid to ukraine. >> our whole goal is to prevent war. if you look at russia right now the reason people should care about ukraine is cited as a pro-american country but look at what putin said, once he takes ukraine poland and the balkans are next and that puts the u.s. that were. jonathan: nikki haley saying it's only a matter of time before russia invades the nato territory. the senate passing in a bill setting up a show down the house. let's talk about the response of the comments from president trump with the nato secretary general saying trump is irresponsible and dangerous. to what extent undermines the

defense clause of nato? >> it creates the uncertainty about where america's commitment to nato and transatlantic security in this run-up to the election and it is not helped by the struggle to get the foreign aid package through that house. the antics surrounding that alongside donald trump's comments absent european leaders . some people have turned this into a conversation about pushing nato members to get up so that 2% of spending on defense. that is an ongoing concern since 2014 but the broader concern is that we have a candidate likely

to be the republican candidate saying he does not care what russia does too america's closest allies. it is dangerous and unsettling at the lease. annmarie: but haven't they heard this before publicly and behind closed doors and view it as trump using leverage to force european allies stated their 2% target? >> nobody is certain what comes next if donald trump hits the white house. there is a concern that donald trump was a man who did not expect to be president who have a lot of ideas and beliefs and scrambling but as we look ahead to what he would do in the 900

page document project 2025 that heritage has put out which include statements on foreign policy. this is a president despite the fact that report does not align with donald trump it is clear, he has a much more serious intention and plan if you were to return. he created uncertainty but working to be reelected we would be looking at a different president from 2016-2020. annmarie: it looks like he is putting pressure on republicans to remove aid from ukraine. it is dead on arrival in the house. where do you see the u.s.

assistance to ukraine this year? this is just not get done? leslie: what we know as we speak to members of congress is that there is a majority, a silent majority of members who would like to see this defense support continue for ukraine but the rupture within the party is extraordinary. senator graham who travels to munich security crisis said he would go to the border and mitch mcconnell standing up for ukraine. with president trump lurking in the background putting the emphasis on border security and not wanting to see a deal and played the role of disruptor

around something that is very serious. it is really turning into a sharp point for the republican party. will they be able to get the support through for ukraine? i still believe that they will but it is hard to map out. we need clever people to figure out how that will happen. jonathan: it is a struggle. leslie, we appreciate you being here. jim, you have alluded to how much finance has changed in the past 25 years. can you walk us through what this will look like in the next 10? jim: the whole concept of open

architecture, we were very much defined in the tailwinds of the last 30-40 years. globalization, technology, lower rates. there was massive growth in the global growth markets. the monetary policy had a massive impact. now we are getting to a level side of the future. the largest dominant players and capital formation, fixed income, equity, banks will play on a global stage and an open architecture manner. people will partner with folks ended opening up of how people think about alternatives in retirement savings.

you see what is happening in canada, australia and mexico. it will be longer-term retirement savings but with a lot more open architecture. lisa: who will your biggest competitor b? leslie: a combination of existing competitors today. jonathan: he is not going to name them. lisa: i just want to know is that banks, asset managers, tech companies? jim: people talk about transactions or competitors. you have to have an advantage of the product you're delivering. you can have great headlines and ideas but you have to deliver product. jonathan: we just wants a media

drama. jim: i'm here to invest. jonathan: coming up david kelly, sara malik of wells fargo. this is bloomberg. ♪

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>> the inflation problem is not going away. it will continue to create more

and more risk of financial stability issues down the road. >> i see this that could perhaps jeopardize this inflation. >> every single investor is pricing in a soft landing which gets me quite nervous. >> we need less dovish data and i think that would be enough to send some pain across the asset classes. >> if we were to get an upside surprise and cpi, folks might say, is this thing overheating? >> this is bloomberg surveillance. jonathan: live from new york city this morning, good morning, good morning. the third hour of bloomberg surveillance begins now. 30 minutes away from the cpi report in american we are looking for a to handle on headline inflation. lisa: my take away is things are -- people are looking for this to be more bullish. if you get a downside surprise,

watch out. it will be a riproaring rally because that seems to be the tone we're hearing from everybody. jonathan: what are we looking for today? is it in-line or more of the same? lisa: it depends how people are feeling but we will be dealing with potentially the lowest inflation rate going back to early 2021 at a time when people are starting to sniff out maybe a broadening out, maybe not, i don't know, it depends on your bias. annmarie: it depends what's playing out at the white house. they continuously tout things like the michigan survey and people start to feel better about the economy. this is the last hurdle when it comes to inflation and they want to make sure that people are feeling better about purchasing power because the jobs market, the president will remind you today when he makes his inflation statement, has unemployment under 4% for two years but can they get over the final bump? jonathan: 4% is where the 10

year yield was on the last inflation print. we are north of 4% right now on the 10 year. the s&p 500 is negative by 0.4%. that's the price action so let's get you the weather update for the tri-state area in 10 minutes time. coming up through the hour, harris associates looking ahead to cpi then concentration risk in the equity market and today's inflation print and what it means for the markets. the top story is counting down to u.s. cpi, the inflation report coming in less than 30 minutes. the headline number could drop below 3% for the first time since 2021. equity markets are at an all-time high in the hopes that maybe this rally can broaden be the magnificent seven to things outside the u.s. and europe and perhaps even asia. david harris joins us right now.

can we talk about the opportunity be on the magnificent seven into europe and elsewhere? >> especially for investors like ourselves, we focus on company specific factors, valuation metrics which is low price, i quality. it's a really good set of opportunities outside the united states. it's particularly in europe where in essence, you can find high-quality is is, 12 times earnings, sometimes eight times earnings. it's yielding more than the price ratios, generating lots of cash, excess cash on balance sheets, pre-cash flow yields are low double digits. these valuation metrics for us are just happy hunting grounds. jonathan: not just you but i'm going through some names where there is a massive deal over the

last 12 months. luxury players, chips, we've seen big moves in these markets. the likes of the dax and the stoxx 50 had moves last year but not as good as the nasdaq 100. what are the kind of companies you are focused on? >> headline grabbing names are blinding investors from what's been beneath those names. take companies in europe, the financial sector, major financial institutions like bnp paribas and france. these are companies that literally trade at seven times earnings and the yield is a most 10% and have excess cash and are buying back their shares at an aggressive amount and everyone kind of forgets about these because they are being shielded or blinded by the theme stocks like that gop ones, the

semiconductor companies. industrials are the same thing when you look at the german premium automakers, bmw, mercedes-benz, they trade at about four or five times earnings and the yield is almost 10%. they have so much excess cash on their balance sheets that they are buying back shares as well. these are the types of businesses no one seems interested in. no one is focused on cash flow and valuations which to us provides an opportunity. eventually, we will come down to earth and we will look at what makes a business valuable and that's the cash rich it generates. lisa: people start -- stop by line -- buyingarm. i want to go to bnp paribas. there wasn't issue with credit suisse and i know that was one stock you got fully out of after

being a heavy investor last march. what did you learn from that episode? how does it color your investment in european bank stocks today? >> in any bank stocks, you have to be able to price uncertainty and some of their businesses. you don't have clear transparency into the assets of every single bank. what you have to rely upon is the economy and the reputation of the quality of the management team. what we got one with credit suisse was we believed at some point they would be able to turn around their investment bank. the other three areas of the business did just fine through the cycle, the private bank, the asset management, the universal bank. all of the strengths in those three businesses were blinded by the ineptitude of the investment bank. our belief was that if they could turn that around, if they could fix that, the other three businesses then, the light would

shine on the quality of the other three businesses. with a situation like bnp paribas, we don't have any need for a turnaround in any of their businesses. this has been historically extremely well-run company, good culture of risk, very good at growing book value over the last 10 years at over seven or 8% per year and today the company trades at 2/3 book value and it yields when you add in the stock buyback, it adds well into the double digits. what you have to be careful of and hope they can fix something. we sold out of credit suisse and started selling it at the end of 2022. when they released their plan to restructure, we thought it was an extremely faulty plan. we thought after all this time, after all this hope, they are not going to be able to fix this. by the way, the problems investment bank as we know at

the end of 2022 were finally starting to drip into the other strong divisions. this is one of the lessons. if there is a bad division, it might be bad for reason and sometimes you have to assume it's irreparable. lisa: was it a one off? do you see other issues, specific concerns and other banks whether it's in europe or the u.s. that haven't been fully identified? >> was a one off? it was a one off i believe in the greater scheme of the european banking sector. like any company in any region, they will run into problems. silicon valley bank i would argue is a one off because they were so irresponsible on duration matching that it wasn't a credit quality issue. it was this duration matching with assets and liabilities. they were so irresponsible. many banks are not severe responsible.

i never thought it was systematic. i do believe it was more of a one-off in the silicon valley bank and the other regionals who got caught up with the same lack of risk control, same thing in europe. company like bnp or lloyd's, these are the financials we have that have never had major quality compliance risk issues. this is what one has to look for is the culture of risk control. in banks, this is number one, risk is number one. jonathan: let's talk about your approach to investing. we caught up with apollo in the previous hour. we were talking about passive investing over the last 10 years with the explosion of it and getting session the bigger getting bigger with money going into equity markets and going into the magnificent seven like over the last 12 months. how would you frame things?

do you see passive investing as the enemy to the kind of thing you do every single day? what use is it if you find a name that looks good on paper but the money never comes. >> passive investing isn't active investors friend. i say this because the weight of money going into passive investing means that money is just being invested in businesses in essence because they are there. this creates an efficient pricing of assets. in the short term and maybe the medium term, you listen to david einhorn last week, he talks about the challenges competing against these. the way the money moves into this, the stocks that market caps get bigger and bigger, it reminds me of the idea of portfolio insurance, as the stock price goes up, you buy more of it. when cars go up, you don't buy more cars prayed when the price

of businesses go up, it goes against economic fundamentals to buy more of them. in the long term, this creates opportunity for active investors which will exploit these market inefficiencies. would also look at more volatile. sometimes our clients don't like the varying index. it ultimately creates market inefficiency which is good for the active investor but in the short-term, it certainly isn't painless for us long only, boring, value, bottoms up investors. we sometimes get kind of blown away where the weight of money is going where we may be invested, where the weight of money is coming from. that means weakness. jonathan: i appreciate your response to that. we would love to do a roundtable with you. it's good to catch up with you.

passive investing is the friend of what david does every day. lisa: it's a matter which stocks you are looking at and it matters what your thesis is but this is how traders are trading now. it's around these baskets and whether you use them to benefit you were not. this is the way the new structure is playing out. jonathan: equity futures are negative by one third of 1%. we are 18 minutes away from the cpi print. here is your bloomberg brief. dani: a powerful winter storm is set to hit the northeast today in the u.s. with heavy snow across the region new york city public schools will do classes remotely and expecting as much is eight inches of snow forecast. arts of northern new jersey and eastern pennsylvania and southern wing when could see a foot of snow and hundreds of flights have been canceled into regional airports. his so-called that finger trade is being blamed for s&l shares.

there was a three minute trading halt due to volatility. it was the biggest on intraday basis since october, 2022. president biden is forming a task force to address the mishandling of classified documents during presidential transmissions. they had found that biden kept in his possession after he was vice president. house officials called it systematic issue affecting both parties. the task force will provide recommendations for the next presidential transition. that's your bloomberg brief. jonathan: thank you. up next, we look at concentration risk. >> narrow leadership, even if it continues, it's not a healthy thing. it's making the s&p 500 and growth indices very concentrated. jonathan: that conversation is next, live from new york, this is bloomberg. ♪

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constant contact. helping the small stand tall. jonathan: inflation data is moments away at 8:30 a.m. eastern time, about 14 minutes away. equity futures are negative one third of 1% on the s&p 500. the concentration risk this morning threatening the rally. >> narrow leadership even if it continues is not a healthy thing. after all this time, there is still a tale of two cities where make a cap tech company are the ones beating expectations and getting richer and richer valuations, leaving the market higher and higher. it's making the s&p 500 and growth indices very concentrated. jonathan: bank of america said investors are loading up on big tech. the latest fund manager survey

says -- sarah is with us around the table. >> good morning. jonathan: let's start with the perceived risk. why is narrow concentration in the equity market necessarily a bad thing? >> there have been two factors driving the market this year and that's earnings and the economy. if you look at fourth-quarter earnings, they been heavily weighted toward technology stocks. the growth is about 60% on the magnificent seven and overall growth should be about 5% year-over-year. what is the catalyst now that tech stocks are behind us with their earnings. what we are looking at is higher for longer rates, less rate cuts then the market expects, heavy

election year and 77 countries with 60% of gdp going to the polls. that's more headwinds for the market when the catalyst is technology and the earnings growth is behind us right now. jonathan: your year and call is where the market is now? >> did is. jonathan: do you have a preference in terms of sectors at the moment beyond big tech? >> it's tough to that against u.s. technology but we have to be selective so company like amazon and alphabet and the ai stocks are hyped and they should be the winners. we think the market needs to broaden out. we are starting to warm up on real estate. the reits tend to do well in an area where interest rates are stable. energy prices might continue to decline immaterial sectors have been squeezed to perform well and fixed income over equities, equity valuations are at a premium, trading at about 15% above their average. fixed income looks compelling.

lisa: what scenario leads you to an underperformance on the index level but a broadening out which requires ongoing growth and a rally in fixed income which -- with cuts to interest rates? is this a soft landing base case you think will somehow hurt some of the biggest winners? >> technicals and valuations are the concern in equities. valuations are above average and technicals are in overbought territory not only for technology but for the s&p in general. that's what concerns us with these admins going forward. in fixed income with the cash still sitting on the sidelines, we think you can get higher total returns in fixed income going forward so the cash eventually moves back into the market into lower risk areas like exton come where you can reach more and get more yield in your investments. lisa: are you talking about longer term treasuries or investment grade credit or higher yields? >> we like high yield leveraged

loans. we also like high yield where you can get more in terms of returns. it's a much higher quality than it used to be in past economic downturns. jonathan: we have to have a conversation about commercial real estate. what are the concerns around that for you? is that an issue that hits a couple of banking names and not everybody? >> if you look at new york community bank, commercial real estate is at a higher percentage for them than other banks. we don't think that will turn into contagion like we saw last year with some of the larger and regional banks. also withinreits, commercial real estate within that market is less than 5% so there areas you can invest in within real estate to avoid it. at any time, you look at these banks and everything is digital and you could get a run on banks in general but i don't think it will be a broad-based commercial impact on these regional banks. jonathan: let's finish on the come -- on the consumer.

we will get retail sales in a couple of days so how squeezed is the american consumer? we've been told that repeatedly and seemingly, they are still doing ok. >> we get retail sales this week which were strong. this week, we will see a little bit of a moderation. the consumer is still spending and that's because of the trillions of dollars that came to the consumer during the pandemic and the gear of low interest rates through the pandemic. the consumer hangover will eventually come but we are not seeing signs of it yet. with inflation, the concern is that the fed says they want to see broader disinflation before they start to cut rates. i think we will see disinflation continue to moderate but it's core inflation, the services spending, auto insurance, if that starts going up, that's not great for the market. jonathan: let's get a preview of the inflation number with michael mckee. the number is eight minutes away so what are you looking for? mike: we are looking for improvement. the month over month number for december was revised down 0.2%

last week. it would be hard to see it going below that on a month over month basis. we are expecting the headline inflation number to come in at 2.9% which be the -- which would be the first time since 2001 that it managed to fall below 3%. economists say when it comes to the core rate, it still remains strongly above 3%. the issue is the fed doesn't really look at cpi other than an input into their discussions. they will focus on the pce report later this month. lisa: in your conversations with fed officials, how much are they looking pass this to retail sales and more jobs data? this is considered backward looking so will it give them what they are looking for? mike: they will take this apart. cpi is much easier to dissect in terms of the number of categories that it measures.

they can find out if they are getting that brought disinflation, they have talked about it. we will look at that to see what kind of progress is still being made. by their nature, they are backward looking. the fed wants to see continued progress. jay powell said we don't need to see better progress, just the same kind of good news. jonathan: more good data, thank you for breaking it down. can we wrap it up with cpi? where do you expect inflation to come in over the next couple of months especially when the fed moves in a different direction? >> we will start to see someone of a decline. looking at the number today, month over month, if it comes closer to .4%, that will be negative for the markets. it comes in below 2% month over month, you will see a lower quality rally and people perhaps we'll see rate cuts sooner.

in between, we will see more of the same year to date. we will see how the markets react when we get the number. jonathan: consumer confidence picks up as well. we will see if it has any effect at all. lisa: something had an effect on the new york federal reserve that pointed to the lowest three year outlook for inflation going back to at least 2013. sentiment is shifting. how much are gasoline prices directly correlated. you are seeing three dollars per barrel oil. jonathan: wasn't that part of the survey? lisa: if you map out the university of michigan sentiment survey with the price of gasoline, it jibes pretty closely. jonathan: you can do great things with political parties.

it depends who is in the white house and that depends how happy you are on the economy which is ridiculous. lisa: it speaks to where we are at now. we are in a great place. jonathan: we can talk about u.s. politics in the year ahead. lisa: we are at a pivot point in many places. i'm excited to delve underneath it. it's a fascinating time, irritating in some ways. jonathan: sarah, thank you. cpi data is coming up next. our chief economist at wells fargo is breaking it down. inflation data's around the country and equity futures on the s&p 500 are little bit softer, down 0.3%. the data is up next. ♪ ogs, i invest in a fund that advances innovations like robotics. fresh, warm hot dogs, straight out of my torso! one for you, one for you. oh, you're a messy one. cool, right?

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jonathan: inflation data and america is about 20 seconds away. on the s&p 500, negative by 0.3 percent and on the nasdaq, down about 0.7. in the bond market, the 10 year is 440 and the yields down three basis points on the two year. we are down the basis points there as well. let's go over to michael mckee. mike: good morning. the good news doesn't

necessarily continue. cpi is up 0.3% year-over-year. that puts us at 3.1%. that's down from 3.4 but it's not the 2.9% that many people had hoped for. the core rate comes in at zero point 4% rise, higher than the 0.3% rise anticipated. it leaves core inflation at 3.9% which was the same than a month before. you can take the scores and i will look at the break down and the problem is. jonathan: i'm sure you can guess where we are, we are negative on the s&p 500, down by 0.8%. the first move is not always the right move after economic data. the nasdaq 100 is negative on the back of hotter than expected inflation with yields much higher. they were lower in the two-year is higher by 10 basis points.

yields are up on the longer end of the curb by six basis points. you push those moves through foreign-exchange and you got up stronger dollar and a weaker euro. you put this data together with strong payrolls print and decent wage growth with a decent ism services and you start to get a little bit more worried about maybe the federal reserve not being able to cut interest rates anytime soon. i go back to the quote from stewart kaiser at citigroup. the cpi print as the power to toggle the storyline between soft landing and overheating. here we are in the middle of february and that conversation is not running away with itself but it's heating up a little bit. lisa: i think that's what you see in the market. earl davis gets a victory lap after he was talking about shorting the two-year. this seems to edify that.

the key thing here is if you are not seeing a broadening out, how long does the fed have to wait? not only is this not as good data but it kind of flies against some of the progress which is the reason i'm curious. i'm curious whether we will see an ongoing acceptance of broadening out with this data even though it's not as good. it meets the threshold for jay powell or does it? jonathan: do you see the broadening out? do you see the disinflation trend? mike: we basically say some of the usual suspects here. of the biggest reasons we saw cpi come in stronger than anticipated was housing. shelter cost were up 0.6% after 0.4% the prior months in the same thing is true of equivalent rent. home prices are still pushing up and rent prices are still pushing up the cpi. gasoline prices went down 0.9%

so that's the good news but food prices were double what they were the month before. food is something that consumers will notice and housing is propping up the cpi rate higher than the fed wants to see. many other things are down some like apparel which is down 0.1% in used cars and trucks were down 0.7%. we are seeing some progress -- sorry, they are down 3.4%. we are seeing some progress in the areas that had given us problems in the past. the big ones are still contributing to cpi. lisa: you look at the market response and people have expectations for a march rate cut. there is a 17 perchance -- a 17% chance baked in. is this is bad for the fed as it may seem in terms of moving in

the opposite direction? do you think there are enough signs underneath the hood of some sort of broadening out that he gives them comfort to continue with some of the same rhetoric we've heard from them? mike: i think you will see the same rhetoric. it's not what was wanted or expected but it isn't a reversal. we see the inflation rates on a year-over-year basis going down. housing is a 1/3 weight in the cpi where it's smaller in the pc which of the fed follows. i think they will see this as progress but frustrating. they weren't going up in march anyway. they will need three cpi reports before they get to the main meeting so there is time for this to turn around. people are wondering when house prices and rent prices start to go down or do they? jonathan: thank you for breaking down the cpi report. we come in just a little bit hotter than expected month over month, headline cpi 0.3%.

the number we were looking for was 0.2 in our survey. we came in at 0.4 were looking at 0.3 so that's takes you number two 3.1 the estimate was 2.9%. excluding food and energy, 3.9% in line with where we were last month. let's push that through this equity market, down hard by 1% on the s&p 500. down to four percentage points on the small caps. let's look at the bond market. two-year heels are a lot higher, a double digit move. -- two year yields are a lot higher, double digit move. on the 10 year, you push that through foreign-exchange in the dollar is stronger and the euro is weaker. just about holding onto $1.07. what michael mckee did there is important.

does this inflation data change things for the fed? does it change things for this market and what it has priced and coming into the year? the implied forecast from the dot plot is three cuts this year. the fed had three in the market was something like six. we've been chipping away at that and chipping away at that over the last six weeks. now we are looking at where we are price for 2024, we're down to about a hundred basis points. how do we close the spread between the market and the bed? does this -- and the fed. does it change some even the market? i'm not sure if it changes anything for the federal reserve and whether that dot plot from the end of december, if they did a cut after this would change too much? lisa: that's a great point considering the fact the fed has been fairly consistent on pivoting. the market lesson is important which is which areas of the

marketer most leveraged to the idea the federal reserve cutting more aggressively than they plotted in their dot plot. i'm looking at the russell 2000. they are down 2.4%. they are down hard and this is been the main obstacle to broadening out because there is a conviction in a call that many people are backing away from. six rate cuts seems like too many for this market. jonathan: let's get you reaction on the street. wells fargo joins us now for more. your initial reaction to the cpi print from eight minutes ago? >> it's not good news. we would prefer to have seen something less than that but mike made this point, the fed is much more focused on the pce than the cpi. the weights are different in that and they think it's a better measure of inflation. by that measure come inflation is lower than the cpi. the second point is the fed is

not going to make a decision based on one data point. they will take the totality of the data and look at it when they make a decision. as a rate cut going to happen in march? knowing what i know, probably not. may is a long way away and we have a long time between now and then we will see how the totality of the data pans out between now and then. jonathan: let's look at the last six weeks. we had a decent hot payrolls but report, ism services picked up and prices paid started to pick up as well and manufacturing is close to getting into expansion territory. what we came into this morning, they've said the cpi number we just got had the power to topple the storyline between soft landing and overheating. county data points are we away from having a bigger conversation about the prospect of this economy still overheating? >> i think it's going to boil down to getting back to the pce deflator. that measure of inflation, if

you go back to the 1990's, i'm not saying this is a goldilocks economy but we had very strong growth in the 1990's and very low inflation. that's what matters to the fed right now. i'm not saying the hard data don't matter but i think they are putting more weight today on their -- and where inflation is. how many data points are we away from that? between now and may, we will get three more prints on the pce deflator. in late april, we are still running north of 3% in the core pce deflator, we are not talked about the fed cutting rates anytime soon. that's the way i'm looking at it in broader terms. lisa: i'm wondering whether we are getting to the point of people questioning whether disinflation can continue without a greater weakening in the labor market? i'm looking at real wages coming in on an hourly basis at 1.4% which is one of the highest

readings going back to 2021. how much does that have to shift before you start to see more of a broadening out of disinflation? >> if you look at the employment cost index which we got a few weeks ago, on a quarterly basis and annualize that, that's only 3.5%. if it stays there, then we have trend productivity growth. that's consistent really with the 2% inflation rate. we've gotten to really good productivity numbers in the last two quarters. you can't make inferences off of two data points. i think we need to see more of that. perhaps what's going on underneath the surface and maybe i'm grasping at straws is maybe productivity is faster than what we think. if it is, you can have that stronger wage growth that's consistent with the 2% inflation rate. lisa: when do we get out of this model and get into something

where people on both sides says we are heading to overheating or some sort of downturn? what is the threshold of understanding where this economy is in a post-pandemic reality? >> i still think we are dealing with not so much shocks of the pandemic but we are still dealing with a lot of uncertainty as it relates to the geopolitical situation right now and when we get out of this model. i wish i could tell you that. it's going to be quite some time because i think the underlying structural economy whether it's productivity, things of that nature with labor force growth, there is still a lot of volatility going on in that. i think we will have a model picture for a while yet. lisa: you look at the balance of risks so do you think the market is actively pricing in the risks of overheating or more significant deceleration in the economy? >> i'm not a stock market strategist.

it seems that we came into the year with everyone expecting a soft landing. it seems like in some sense, the expect tatian of the economy whether it's priced into the market were not, the expectation right now seems to be for very good news. if you don't get good news like today, that's going to upset that narrative at least for some. of time. jonathan: good to hear from you. the more i think about it, the more i think if you sat down with the fed official now that they would turn around and say i told you so. this is why they want to wait. lisa: they want to be patient and have that leeway and we will see surprises like this. we have a lot of data to look at but we are probably not going to go in march. jonathan: which is basically what they've said repeatedly over the last few months. if you're tuning in now,

inflation data came out about 13 minutes ago a little bit hotter than expected, only 10 basis points hotter but that could be a big deal on wall street. we were looking for .2%. month over month without food and energy, point or and we were looking at .3. year-over-year, 3.1%. we stay at 3.9% and we were looking at 3.7%. equities are a new session lows, down 1% on the s&p 500. you talked about the small caps down but 2.4% early this morning. lisa: that highlights how they are more leveraged for rate cuts and other asset classes is the reason we haven't seen a broadening out. i'm still you see the whites of the rate cut eyes, people won't necessarily go into other leveraged areas. jonathan: i love that line. let's turn to the bond market.

a digit move across the curve. the two-year is higher in the 10 year is higher. 45922, very briefly if you go back to the middle of january, the last time we got a cpi report, the two-year closed that day at 424. we've repriced a fair bit on the 10 year from 4.2691 this morning back to the middle of january where we were sub 4%, closing at 3.96. the equity market held up in that time pretty well in the face of yields repricing higher off the back of decent economic data. without a real scare, that may mean we have to deal with inflation prints. i wonder how this changes the story, the connection to how the data speaks to bond yields and how you want yields speak to equity performance. lisa: right now it seems people

are looking past to some sort of significant degree whether we get a resurgence in inflation but i wonder how many people will come to this idea of citigroup which is a repeat of 1998 and will we hear more of that going forward. jonathan: let's get you a wrap up of stories elsewhere. this is your bloomberg brief. dani: the u.s. has approved a $95 billion in assistance for ukraine, israel and taiwan that the legislation faces an uphill battle in the house. they had an all-night session to debate the bill and it pastorally this morning. republican leaders in the house to mend present by and take action against undocumented border migration before passing any ukrainian aid. shares of jetblue are higher premarket. carl icahn disclosed nine point 91% stake. stock fell 30% in the last year. the federal court struck down an alliance with american airlines

and a plan of spirit airlines. he's had talks with management about a board seat. shares of manchester united climbing after billion jim radcliffe said he'd extend his offer to buy a 25% in the club. he said he would purchase estate by allowing investors to swap 1/4 jonathan: jonathan: of the market price. up next, passing through inflation data. >> we would prefer to have seen something less than that. the fed will not make a decision based on one data point. they will take the totality of the data look at that and make a decision. jonathan: that conversation up next with david kelly of jp morgan. ♪

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jonathan: live from new york city, inflation data coming in hot. >> it's not good news. we would've preferred see something less than that. the fed will not make a decision based on one data point. they will take the totality of the data and look at it when they make a decision. jonathan: your equity markets are negative one .2% on the s&p 500 with yields higher by nine basis once on the 10 year. this dollar is stronger. david kelly is with us, global -- chief global strategist at jp morgan asset management. inflation data 20 minute to go so the federal reserve said we need more good data, not better. was this good or bad? >> they are so determined to get inflation down to 2% as fast as possible.

it says the economy is cooling but it's cooling more slowly. there are certain aspects of this report that push the numbers higher but overall, the economy will grow and they think inflation will come down year-over-year. we've got 3.7 percent unemployment, 3.1% inflation and add those numbers together and that creates a misery index. that's not that miserable. they should enjoy this. this is not bad, is just cooling more slowly. jonathan: the dot plot implies maybe three cuts this year at the federal reserve. the market is closer to six to start the year. is this a bigger game changer for the market than the federal reserve? >> we always misinterpret what the market is saying. it's a weighted average of two scenarios. one is you don't have a recession where the fed can do these cuts or you have a recession and you have to cut three basis points. what has happened is the data we've had in 2024 have pushed

the possibility of a 2024 recession getting smaller and smaller. i expect we will see a remote -- a reaction in the market to that. the market still anticipates at least three rate cuts. lisa: i like the way you talk about how this is a goldilocks kind of situation. what is your investment response to this given the fact that the market has and perhaps more aggressively pricing a downside risk that's getting pushed out? >> you buy bonds for income and diversification. you don't buy bonds for capital gains. there is nothing wrong with four point 25% on a 10 year treasury given the rates which are coming down to 2%. we don't expect much of a capital gain there.

for the equity markets, i think the important thing is the -- is that this soft landing is continuing. we can keep on slowing inflation down and keep the economy going for as long as it happens. think that helps with putting money into the market. p/e ratios don't stop at the limits of prudence, they stop at exuberance in this market is getting expensive but it doesn't mean the party is over now. lisa: if this is good news for the economy, why russell 2000 stocks performing worse in the face of this data and the suggestion the fed will not cut rates more aggressively? >> it may be a timing thing. when you bite small caps, in recession. the timing doesn't sound right. also coming got a lot of regional banks in the small-cap arena that are getting hurt with

a lot of unprofitable companies. the market cap of the top 10 stocks is enormous but their share of earnings is also pretty high. it seems money has floated to the top in terms of market cop and that's not helpful for small caps. jonathan: i think it's quite original your thinking on the economy. you put less emphasis on the federal reserve. in terms of the economy, going through this process of self healing and readjusting, do we talk about the federal reserve too much in regards to inflation? >> yes, i think the fed has a big impact on financial markets but a very small impact on the economy. they said they managed to bring inflation down but did they? the only mechanism they could have done that is reduce aggregate demand but we so gdp growth to 4.9% in the third quarter. there is not the slightest evidence the fed has succeeded

in slowing down the economy. it can't take credit for lower inflation if they didn't slow the economy. jonathan: you expect us to get back to 2% with that process continuing? >> we still got auto insurance up 20.6% year-over-year. we know that new car prices stopped rising and auto repair costs arising more slowly. this thing has to crack. it's taking its time but it has to crack and shelter inflation, rents are being negotiated at the point of rental are not going up that fast so that will crack. if you look at auto insurance and shelter, they are 80% of the year-over-year increase in cpi. they will come down and from a technical perspective, you can get down to 2% even if the rest of inflation is sticky. jonathan: if they influence financial conditions and not influencing the direction of inflation, how should the committee set interest rates?

what should they set them for? >> is a normal level which would not cause financial booms and busts, they cause tremendous distortion of financial assets in real estate by pushing rates way too low for way too long and now jacking them up and living a generation of americans unable to buy a house. stop it already and get back to it normal level, practice your golf game. don't do this stuff and wait for the next financial crisis when you're actually needed and don't micromanage the economy. i think the economy would do better. jonathan: david kelly, thank you. cpi coming in a little hotter than expected with equities down by 1.2% in bond yields are higher. this conversation will continue tomorrow. that and a whole lot more, from new york city for our audience worldwide and our audience in the tri-state area, stay safe as

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manus: a very good morning. we had a little bit of a shakedown on the cpi. it has ripped the underbelly on the upside of the equity markets. the countdown to the open begins right now. announcer: everything you need to get set for the start of u.s. trading, this is "bloomberg the open" with jonathan ferro. ♪