>> the depth and breath of supplies across the board and it's a much more resilient economy. >> we are not seeing any signs of consumer hangover yet. >> i think you still have to argue it's pretty broad. >> as earnings become clear it's where we have to focus on. >> the important thing is the soft landing is continuing. >> this is bloomberg surveillance with jonathan ferro, lisa abramowicz and annmarie hordern. jonathan: for our audience worldwide, good morning, this is bloomberg surveillance.

en jonathan ferro, your equity market is bouncing back on the s&p 500. we begin by talking about a single name in the premarket. you've spent hours, days going over your earnings report and then you release it and say margins are going to increase 500 basis points. the stock surges, you get on the call and say i meant 50, not 500. lisa: is this just lyft being a peculiar company or is this something this morning farias. a lot of people saying a clerical error it's not necessarily securities fraud. can you imagine if you are on the others that? jonathan: the numbers were quite good. they are talking more about the results themselves than they are the shocker of saying 500 and they meant 50. annmarie: they did really -- lisa: they did really well,

including projected earnings as much as 11% higher. why would they have two muddy it up with something that so distracting and just stealing the headlines with unnecessary sort of dismay. jonathan: it's worth a couple of seconds prayed where would the stock be this morning without that taking place yesterday afternoon? lisa: up 21%? it would be higher. you have to wonder what management is doing if they allow this to go through. it raises some extra questions they did not need. jonathan: no extra zeros here whatsoever. let's turn to the broader market. yields much higher. the two-year, 460. inflation yesterday a whole cpi report might not be enough for the story the fed is telling. annmarie: i love -- lisa: i love some of the commentary.

saying goldilocks in the first got punch. basically talking about how everyone was talking about a soft landing the narrative starts to shift, that hot landing type of scenario. you see the market and you see these analysts pushing back expectations for rate cuts and talking about how the broadening out of inflation is the wrong thing the fed wants to see. annmarie: this also had political ramifications because you had these categories going up, food, dining out, energy bills when it comes to electricity. which shocked me was the gem in this report was summing that was dogging the administration. can you imagine though if gasoline prices were to take in some of that risk or something bigger happened? jonathan: expectations were pretty elevated that all of this would fade away quickly. the fund manager survey we talked about the most optimistic

global growth in two years. magnificent sentiment, only 7% expected to cut higher pricing pressure. lisa: which is the reason we saw the biggest move in small caps yesterday which was the biggest going back to june of 2022. a knee-jerk reaction. driven by the shorts and people coming out who were one sided to the soft landing narrative. do we see this shift with people coming in and buying who have been talking about this is an opportunity or do you start to see a more significant narrative shift about the broadening out of inflation pressures which is opposite of what the fed has to see and what the fed has to do to counter that. >> broader equities, equity futures on the s&p 500 positive by one third of 1%. yields yesterday are higher. down two basis points. coming up this hour, russ

following yesterday's self. a standoff in the house over eight to israel and ukraine. and sarah wolf on the state of the economy and retail sales coming later this week. that story out the back of a selloff in business, pushing the red -- fate -- fed rate cuts. holding on to june saying the cpi while inflation is decelerating it would not be a straight path we continue to see june we are expecting three rather than 45 cuts this year. let's talk about the data this morning. is that enough to derail the goldilocks soft landing of 2024? >> i don't think so. the number was a bit hot. we were expecting .39. clearly the wrong direction, there is some estimation around this and i think the broader

issue inflation is getting lower but there are parts on the service side that are sticky. we saw that again with rent and while it's going to go down it's not sliding as fast as the market had expected which -- as quickly as you needed it to to validate that in late 2023 that they would start cutting in march. we see that the fed will begin cutting late this spring or this summer. we still think maybe three or four cuts are likely. again it's not to be a straight line and they're going to be points where you get a bit of the backup. taking some air out of that hot expectation we had back in late 2023. jonathan: let's take stock of where the economic mess is. maybe shelter inflation a little bit stickier as well. is that bad for both stocks and bonds or better than one versus the other.

russ: yesterday was tough for the bond market, stocks took their cue from bonds. the flipside of this is we have an economy at two .5% inflation at 2024 and we get another 2% growth on the low side. if you've got 4.5% nominal gdp does a decent shot at earnings estimates will probably be a bit too low. so i think that despite yesterday's action the stock market is probably good to be decent for u.s. equities. we can probably put another 6% or 7% year-to-date and there's reason to stay long equities. lisa: in particular because some of the more cyclically exposed stocks and i'm thinking small caps have gotten more and more beaten up the more people push back expectations for rate cuts. when does that stop? >> last year you had this driven

rally in november, december. in small caps benefit. the problem for small caps is it's an odd point in the cycle to get on small caps the quality is much lower than the large mega caps. we saw yesterday that are rate sensitive. we have an environment where rates aren't falling as quickly as the market believed small caps, early growth. these parts of the market are sensitive. the short answer is we are still long maybe in the mega cap tech gains that are higher quality. we think benefit from longer sector themes. there are still a lot of parts of the markets in airlines, autos, parts of the consumer sector litter pretty cheap despite where the market trade is at. there is some value there. lisa: how underweight bonds are

you? russ: we are still a little bit underweight bonds. maybe half the year to the benchmark, we have been cautious. we do think spread out assets look good. probably have not been able to see for 15 years but the long end particular we remained cautious. the over optimism about when the fed is going to cut and how the other part of that is supply. we have a significant amount of supply with some of the actors back in range. so still a bit underweight bonds, most of them underweight. concentrated on the long end of the treasury. >> when do you start getting interested. going for 5% again? >> i don't think -- 450 is depending on the context. pretty hot on inflation.

that number goes up. it's a rough estimate. i think you got to 450 and gets a bit more interesting. we do think inflation is heading down. we think you will see core inflation in the 2.5% range by the end of the year. if the market gives you an opportunity i think it becomes a bit more interesting relative to where we were a couple of months ago. lisa: are you the kind of person that says sell off, this is a dip, or are you the person who says we have allocations to stay steady and see how things go. >> particularly in the late afternoon that's pretty dramatic selloff. there were parts of the market you may want to go back and take a look at. i do think that the narrative did not change yesterday. it reminded us the path of that inflation is going to be bumpy. we still believe the economy is

in good shape. i think the short answer is you mostly stick to your plan. >> let's talk about that with regards to equities and finishing overweight in equities. is the u.s. still the only game in town? russ: we all also been overweight and japanese equities which would be interesting for the first time. i do think the u.s. is the best game in town and there's a couple of reasons for that. the u.s. is still the most resilient economy. we are seeing that with economic data generally coming in strong. beyond that you still have the quality, consistency and profitability. we look around the world at companies that have those characteristics. we still find more of them in the united states and tech and health care, consumer discretionary. jonathan: good to catch up. underweight bonds, overweight equities. the move in dollar-yen yesterday, that's a one

percentage point move against the japanese yen. >> the response from the authorities. lisa: some of the recent rapid moves are in line with fundamentals but some are clearly speculative. i think the latter are desirable. that's the finance minister for international affairs for japan and their sponsor markets. what you can do about it. lisa: people don't think there will be action one way or another. jonathan: still north of 150. let's get you up to date on stories but here's your bloomberg brief. dani: defense secretary lloyd austin has been released from the hospital after undergoing a procedure. the pentagon says he will work from home until later this week. he had canceled a trip to brussels to be with other defense chiefs and will join virtually this morning. austin was hospitalized following complications from prostate cancer treatment. it sparked fear after he waited

days to inform the president and congress. unicredit poised to increase its bonus by 16%. they posted record profit and increased shareholder returns. the average gain will be higher because of job cuts. the increases will be between 9% and 20% according to sources. it bucks the trend of other banks planning to reduce pools after a challenging year. democratic tom swazi winning the race to succeed ousted new york representative george santos. he defeated the republican challenger, taking 54% of the vote. victory flips the seatback to democrats and narrows the gop razor thin majority in the house to just six seats. that's your bloomberg brief. jonathan: let's talk about this just briefly prayed was this a referendum on the sitting president? >> this is a district or

immigration became one of the top issues people were going out to vote for. i come from just outside this district and i can tell you it's a long far cry from the southern border. when you think about looking at november. immigration weighing on long island voters it will be a big issue for president biden. he took it to biden saying there were moments in congress when i served that i went against my party saying he things the border should be shut down. potentially it's what you will see some democrats in home districts actually maybe put some blame on biden for the border. jonathan: interesting. up next on this program, aid for israel and ukraine forcing a standoff in the house. >> i urge speaker johnson to bring it to the floor immediately. there's no question that the senate bill was put on the floor in the house of representatives it would pass. jonathan: that conversation coming up next. good morning. this is bloomberg. ♪

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your small business needs to keep up, excel, ow. constant contact. helping the small stand tall. jonathan: bouncing back a touch on the s&p 500 down yesterday by almost 1.4% at the close. erasing some of those losses towards the end of the day. futures are positive by one third of 1%. 428 68. under surveillance this morning, aid for israel and ukraine forcing a standoff in the house. >> i urge speaker johnson to bring it to the floor immediately, immediately. there's no question the senate bill was put on the floor in the house of representatives it would pass. it would pass. so i call on the speaker to let the full house speak its mind and not allow a minority of the most extreme and voices in the

house to block this bill even from being voted on. this is a critical act for the house to move. jonathan: the white house urging speaker mike johnson to bring a 96 billion dollar foreign aid package to the floor. the bill facing a tough audience in the republican-led house were border security remains a priority. johnson writing house or republicans were crystal clear from the beginning. any so-called national security supplemental legislation must recognize the security begins at our own border but john, we've been talking about this now for weeks. thou skip past one bill, the senate could pass another. will they pass the same bill anytime soon? >> eventually they will have to. that may not include anything they are working on. they have to do this government shutdown bill on march 8 and if they don't they will have a bigger problem on their hand that either the tax bill or the ukrainian bill they have already passed. that deadline is a key one we are watching to see what can get

done. i would anticipate the house will attempt to add to their tax bill to the appropriations bill that has to get done. but the ukraine aid the house has no intention of doing anything on. it seems to be operating on a different timeline which means we could be in the middle of march still talking about this issue. >> could the foreign aid be attached to the spending bills question mark >> it could -- spending bills? >> it's a bit of a chicken and the egg. it's unlikely they will be the ones with attached the ukrainian aid means the bill would go to the senate, we know they have the votes to attach it to the appropriations bill and send it back over but then you are in a situation where democrats and ukraine supporters are risking a government shutdown by trying to jam the house of the last minute. so far they haven't been able to do that. annmarie: yesterday hakeem jeffries says there's 300 bipartisan votes for the package prayed i know it's early in the

morning to think this could happen but could we see a discharge position -- petition on the house floor? >> i think it's a high degree of difficulty to get done. you have timing issues. you've got to make sure you have unanimous democratic support which you may not get if there is aid to israel attached to the bill and you have to find enough republicans willing to buck speaker johnson who right now looks very weak in order to get this done. this is a very narrow path and it's really included. right now that's not my expectation. it's much more likely path. johnson yesterday was talking about the house working it's will which is normally code for putting something on the floor and then trying to amend it. we are not sure what he's thinking yet. lisa: i was wondering why senate republicans would put themselves on the line if they knew it was

dead in the water into the house. it would go against certain members of their base. do you have an explanation? >> i think the tact is live to fight another day. muscle this into the senate, demonstrators bipartisan support , to leader mcconnell's credit the vote did grow in you a 22 republicans in support of the measure in the senate which is a signal republicans -- enough republicans supported to pass in the house. now the ball is in johnson's court and that's out of the senate's control. >> we are looking forward to see what we can get out of this political dysfunction that feels like it's reached a new level. tom suozzi winning that election taking over for republican george santos. this is what he was saying, the people are sick and tired of political bickering, they want us to come together and solve a problem. is that a way people can win a representative >> of long island ditching george santos. it's difficult for them to say

they want problem solvers. there's even a problem solver caucus. it doesn't -- we do anything to break through the political gridlock the u.s. faces. your nominating an extreme candidate on the republican side in your old candidate on the democratic side, neither of whom seem really interested in reaching across the isle and solving problems now. i think it's telling when you look at the state of the union you have democrats and president trump going out of the floor to take a picture with him. the appearance seems to be more important than actually coming together in solving problems and agreeing on policy solutions in washington. >>, we talk about president biden a little bit as well. the reports he called the israeli leader an a whole on several occasions. summarizing a meeting that took place 12 months ago about how angry the president was with his team over the border. this feels strategic. i don't know whether it is, is angry barden -- angry biden part

of the campaign now? >> he's got to look like he's out of touch, you have a lot of voters that are angry that continue to have prices, of the situation on the border and the chaos globally. i completely agree these are strategic leaks. the biden administration is moving to shore up its left flank everywhere it can. it's one of the reasons they put conditions on aid to israel for the vote in the senate. they want to make sure people know they get the message that their stance on israel has not been popular with their base and they know immigration is the biggest vulnerability for them in their reelections. they have to start doing more on this topic throughout the rest of the campaign. >> i was struck by how much immigration played a role with the ad spending and how much they were talking about in the district on long island. if immigration is biden's number one concern right now and he's trying to shore up independence into november, what can he do in

terms of executive action to look like he is at least acting tough on the border? >> he's got the same problem he has where he could do something but he will start to lose the left flank because they think a lot of the actions that president trump took were inhumane. things like title 42 which allowed trump to expel asylum-seekers back to mexico immediately, of these things are just not really on the table for them. republicans handed biden a bit of a gift last week when they denied the border bill that biden was willing to sign because now he can say i tried to get something done and republicans refused. you will see him start to put more resources down to do more to export people and get more clear messages to migrants over the southern border. but he is limited in the tools not because he doesn't have the actual processes but by the politics of it. jonathan: appreciate your time.

what did you think of that read from axios yesterday about the meeting in the last 12 months that everyone knows the president was furious with his team and did not change any personnel. lisa: furious -- annmarie: furious with the factor seems to be no one in the administration wants to actually own the border. it seems some people are coming in and out of trying to solve this problem but to your point, we do see the campaign lean on those laserbeam eyes and i never thought of this idea of angry biden. jonathan: it seems to be strategic. don't you see the same thing. lisa: how do you express your dislike of something without changing policy? how do you end up trying to seem fired up and ready to go without changing personnel. you try to shift your stance at some level. this raises the question of where some of the communications people are paid the instagram

post. annmarie: even worse it wasn't instagram it was tiktok. which is under sify's review and your members of his own party in congress saying i'm not until the president how to campaign but that does unnerve me. jonathan: i just can't. people were upset with jon stewart but i thought he actually makes fun of both sides throughout the whole campaign. i hope this is what he does every year. lisa: it's not just the day of the election, it's the day after. equity futures on the s&p. what a difference in extras zero makes. ♪

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jonathan: bouncing back from the biggest one-day loss at about two weeks, eckley futures positive by 0.4%. inflation print enough on wall street, the bears have returned and goldilocks was still there. >> i also like goldilocks and the first got punch. it's basically the reality check to the fairytale you think you are living in. >> let's turn to the bond market. we had a double-digit move across the curve about two-year out to 10.

low or by a couple of basis points. on the two-year, we are back in the 4.60s. lisa: it wasn't just sort of lip service or market move you see a lot of strategists coming out and reducing some of the rate cut expectations. this is bad on every level. the super court metrics everyone loves rose the most going back, almost two years prayed this is not what they want to see when they're hoping for a broadening out of disinflation. jonathan: jonathan: we will talk to sarah wolf in a moment. cpi with pce and waiting for shouts of one but not the other. you and i said right after the number came out that maybe the changes for the market than fed officials even the guidance they've given us over the last few weeks. >> nothing really changes pray they been talking about free rate cuts. the market was talking five or six. i was looking at bnp for example

he changed his recommendation or expectations pushing it back having fewer rate cuts simply because of the broadening out of inflation pressures. pce will be more important. this does not make them confident. jonathan: a whole lot stronger off the back of the bond move. the euro, this is from the ecb this morning. roses are red, violets are blue. did you see that? this is what they tweeted. i'm docketing use his language i will adjust some of his language. we messed up the last cycle and we will this cycle too. that's the comeback back to the ecb this morning grade lisa: happy valentine's day to everyone, i am curious how they plan to message this given they are seeing more weakness. we also are from the vice president of the ecb saying we are not ready to start cutting rates. people are like whatever. good luck with that.

jonathan: fed officials, boj officials have something to say. dollar-yen 150.64. there's always a feeling in markets. sometimes there's something to it and other times there is integrated this feels aligned in the sand for officials. lisa: is it the line in the sand for them to say we will do something about it. it seems like they will come out and say it. everyone's like we've heard this before and they keep on selling. when do they actually pulled the trigger on something more meaningful and when do they raise rates for stocks to move the bond buying or do some of the financial impressions part jonathan: they need to be credible and if you keep saying it at some point you need to do something. that conversation has to grow in the weeks or months to come. lisa: that's what you are seeing now in the market. jonathan: onto surveillance this morning, fed speak on deck after the inflation data.

vice chair for supervision both speaking with more data due out later this week. ppi and consumer sentiment on friday. fomc meeting minutes, out one week from today. if retail sales hold up, if that's looking hot, you go back to that conversation you start to tip the scales back towards overheating and away from soft landing. lisa: russ said this is not shift the narrative for him. i wonder how many people are saying i'm starting to look elsewhere. when you look at coca-cola raising prices, when you look at elsewhere and some of these price pressures, you have to wonder why people are accepting that and continuing to buy. that's were retail spending comes into play and it's a question of this is a sudden repricing in january. >> already underweight bonds and overweight stocks. that's wide feels good.

let's turn to the politics pray democrats picking up a seat in the house. democrat tom swazi to fill the spot left bacon -- vacant. beating the republican opponent 53.9 percent to 46.1% and 93% of the vote counted so far. the race is a national ash the gop currently holding at -- a majority in the house. that margin gets slimmer. >> if you look at the vote taken place just before the polls close in new york it was the impeachment of sec. mayorkas winning by the slimmest majority, and remember it was deja vu because they tried to impeach mayorkas and did not have enough votes. steve scalise who is undergoing blood treatment for cancer came back to take that vote. this is what you will start to see when you get some of these partisan bills. everyone has to be there and show up. the majority they have is so

slim. >> what was the strategy you think could carry over to the national. >> we can't forget tom is a known name in this district and mas he brand-new to the scene. and some said let's go back to what we knew. santos was a bit of chaos in that district to say the least. when it comes to the national stage instead of backing away from immigration and the fact what we see in our polling is most voters play the blame at president biden for this he took it on saying i think we need to shut the border, more needs to be done and there's instances where i bucked the trend of my party. >> a lot more of that in the months to come going into the general. let's finish on this story. lyft pulling back with a run-up of smudges 67% after reporting an error in its outlook. the ridesharing company said margins would expand by 500

basis points before correcting the figure on the call to 50. the company said the mistake was a clerical error. earnings coming in ahead of expectations as it looks to compete with uber. alex webb listen to the call and scratched his head as well. how on earth does that happen? >> a lot of fat fingers when it comes to trade. this might be one of the physical keyboard. this kind of mind blowing that such a thing would happen, speaking to finance departments, the detail, the laborious and this with which they go through their earnings statements to make sure there's nothing awry and yet somehow it seems this mistake which looks like a case of human error somehow snuck through. the line from the lawyer in the story who says this doesn't look like it's markets fraud, it looks like a human mistake.

it doesn't look -- make them look very good. >> potential legal consequences of this? alex: i am no lawyer. i am not surprised of their people who perhaps do raise some sort of legal trouble taking them to court on the basis of this. the might of lost money in that short window where they have instated the correct numbers. but it's hard to know how this sounds. i wouldn't be surprised if somebody comes up it's hard to predict how that plays out. >> it's one thing to have a fat finger on a twitter post, the release of your financial results typically those are proofread, there's more than one person to look over this. what is that say about how this company is managed? does this raise questions for investors and analysts about what's going on? >> that is the risk, but not in

isolation. if you have a few instances of a seeming lack of attention to detail, a few flubs in the way the company is run it doesn't seem like that is happening. there is relatively new leadership team at lyft. one reason why the reaction was so outsized initially is this is a big year for lyft. it could be the first year they post a profit on an operating basis if not quite on a net basis. so the fact it looked as though they might massively outperform expectations was huge. they have colossal competition with uber. they have different revenue streams. it's very much 500 pound gorilla in the room whereas lyft you can say is more agile but it struggles to come pete financially with uber. that's why attention to detail is super important because it's

working on wayfinder margins than uber does. at the moment there's more than this but it puts management under a lot of pressure to ensure this occurs. lisa: any idea of a clerical error mix me someone think of a back room trying to file them. just moving on there is a point of the earnings were strong, that they did show growth in earnings. people using rideshare services at a significant clip. is this a broader statement on consumer appetite, consumer ability to keep spending. it's also uber, it's not a market share thing. it's an all in spending thing. >> it's interesting they attributed some of the gains to big touring events. the fact people are going out to live entertainment. there was some questioning whether that boom that we saw immediately after the covid pandemic was starting to taper a little bit. according to the statements

yesterday it doesn't look like that's happening. they are really getting that tailwind of people going out trying to enjoy this which is good news across the board when you think about any industry that's dependent on consumer sentiment. so they are clearly benefiting from that. at the same time the fact that a few big live touring events could affect their earnings to the extent that they are willing to talk about it shows that maybe they are dependent on a few small wins in either direction in order to keep on the trajectory they want to. jonathan: slowly moving past the so-called clerical error looking this morning up the back of fairly decent earnings. >> evidently taylor swift is one to thank. she is the reason why ridesharing services >>. >>every single conversation i didn't realize uber was up at close to 100% over the last year. >> their earnings have been incredible. we've talked about how long her

people get to spend $30 to get the $12 salad. there's a question of how much people can actually spend on this stuff and it turns out they can keep spending. this to me highlights the ability of consumers to spend. maybe they want to because it's taylor swift and beyonce. other thing speak to an incredible amount of cash that has not run out. jonathan: do you want to talk about what rhymes with sweet and green. maybe less than it used to has. i'm saying maybe this might be a thing with a place that rhymes with sweet and green. you ask for chicken and it's just a couple of strands. they get the sort of carcass and they spray off what meat is on it. that's what it feels like when you go to some of those places. if you're enjoying your breakfast i'm sorry. some of those -- jonathan: this has been going on for a while. at what point are people willing

to pay to get more chicken. >> may be the president is up to something. >> may be longer. >> you get instead of eight ounces you get six ounces. >> this is the treatment. it's not red maybe it is. equities now on the s&p 500 positive by one third of 1%. let's get an update on stories elsewhere. here's dani burger. >> house republicans voted by the narrowest possible margin to impeach the homeland security secretary. in an attempt last week to impeach the secretary failed after a deadlock. one lawmaker returned from cancer treatment to reverse the embarrassing defeat. mayorkas becomes the second cabinet member in u.s. history to be impeached eerie the effort is likely to die in the senate where two thirds majority is needed to remove him from office. shares in airbnb are lower in the early trade. but, but he reported strong

fourth-quarter results on post-pandemic travel demand. airbnb expects the number of nights and experiences booked to moderate this quarter as demand normalizes. jeff bezos has sold another $2 billion of amazon shares after he sold $2 billion last week. regulatory filings show the sale took place over four trading days. the world second richest man has said he planned to dispose as many as 50 million shares of the company he founded. that's your bloomberg brief. jonathan: appreciate it. incredible market timing or the most phenomenal midlife crisis in human history. just amazing. can you imagine having that kind of access. -- access to that kind of money. lisa: basically he left washington state in november and goes to florida and he think he saved something like -- annmarie: 7% tax in washington

state, you get none of that in the sunshine state. lisa: he probably saved 288 million dollars so far because of that move in taxes. jonathan: isn't that incredible? you can save by making that move. lisa: are you planning on moving to florida? jonathan: i don't have that much cash. if i did without a doubt. i would go sailing into the whole thing. lisa: lemon grove sprayed jonathan: all of it -- lemon grove's. jonathan: all of that. u.s. inflation running hot. >> the strength of this economy has fondled -- before the economy -- befuddled economists. they have a lot of bullets left in the gun. jonathan: the conversation coming up next. this is bloomberg. ♪

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thanks, bro! you've got more options than you know. book now. jonathan: equities on the s&p 500 positive one third of 1%. down on the 10 year. under surveillance this morning, u.s. inflation running hot. >> the strength of this economy has befuddled all your guests. if you look at where the dot plots have been, even those with information of missed this. some signs of a hardened economic condition finally coming up. i think the fed has made the right choice. they put themselves in an interesting position where you can mute volatility and have a lot of bullets left. jonathan: pushing back fed rate

cut bets after the cpi print print the team at morgan stanley forecasting pce. we think the sequential prince in the first quarter will be overall higher than what we've seen in the last six months. this will be one factor delaying the decision to start cutting rates to june of last year. sarah both joins us to get into that data. can we compare and contrast what goes into cpi and pce and how wide is that spread in terms of where these numbers are. >> pce is everything you spend in everything to gets paid on behalf of you. think of health insurance paid your employer pays for that on behalf of you. there's also different weightings. the waiting with consumer preferences and so typically cpi and pce run very closely. we are seeing a pretty large

wedge between the two measures. right now cpi has been running quite a bit above pce. our implications right based on cpi is actually .3 core pce compared to a .4. it's looking a little better and one of the key things is that core services looks like it will be softer in the pce print than the very hot core services in cpi. lisa: normally you would expect some kind of commentary from fed officials. ian said typically you would look to the fed to deliver assurances that a single data point does not make a trend but we are skeptical of that approach. you talked about how trying to explain away the strength of cpi because the broad-based nature of price increases. do you agree with that? >> it was definitely a broad-based increase this month. if you look at the brats of acceleration in the cpi printed was fairly wide.

looking at the cleveland fed mean measure which showed a notable acceleration. we have to remember it is one data print. we saw three plus months of soft cpi and pce prince which gave us a lot of confidence the inflation was on the right trajectory. this is why the fed said they wanted to see a few more pieces of inflation to believe inflation was sustainably moving towards 2%. you can get some outliers like this where cpi re-accelerates. right now i believe they will say it is one data point but they will keep watching so it doesn't change the fed's trajectory. if anything it keeps june firmly on the table where it's just enough time to get a few more prints and feel confident this is just a one-off. we get three more cpi prints ahead the fed meeting and more on the day of the next fed meeting in june and then we get three more job -- for more job

reports. it's -- there is more data to come before that meeting in the summer. lisa: analysts saying this was significant and this is a game changer when it comes to the broadening out. you can just explain this by seasonals. is there a messiness under this data it makes it dismissible a sort of a blip? sarah: there's issues with the seasonal factors. we know there's a lot of noise and maybe a bad signal on the seasonal factors. but we also know some of these are on the right trajectory. shelter accelerated the latest but all the forward-looking indicators on the new tenant index showing too much cooler path for shelter inflation in the back half of the year. i think we can feel confident the forward-looking data is still looking fairly solid which is about one third of the overall basket.

you look at the other core services. i think that's where we are a little bit more concerned. we've been seeing progress and wages for about a year now. with this re-acceleration it calls into question can we feel confident core services and housing will remain on the right trajectory. it's yet to be seen and hard to know if this we acceleration is here to stay or it's a little bit of a one-off and we will see urging in the february and march data. it bears watching but it's too early to call it out as this is the future of inflation. >> the richmond fed president talked about some of these companies that had to raise some of their prices and says it's conceivable now that's off the table. they continue to do this when you look at some of the basic food prices going up. they will have to maintain these elevated prices to maintain a profit. sarah: it will be tricky for them because we know the consumer is becoming more price-sensitive particularly in

the lower to middle income distribution. even though labor costs are high it forces it to push some of that pricing through we know it's becoming increasingly difficult because of the household pulling back on their spending. lending standards are tightening. it's less about that willingness to take price among households and that will be pushing back against businesses and their ability to pass the price. jonathan: let's talk about the weather in retail sales. when payrolls came in just before it people told me it was warm so payrolls would be good and now i'm being told it's cold. how is there a difference between the two? is it a survey we? >> it looks like there's a bit of a survey week problem. the first half of january mostly captured in the payroll report. the back half was colder. retail sale captured the entire zone. the warm weeks and the cold weeks pre-what we are looking for is a -.5% on the month.

part of it is the weather but most of it is seasonal factors. not to get nerdy here but historically the seasonal factors look for massive holiday spending in november and december and a big drop off in january. the seasonal factors have been messed up for retail sales in the last few months with normal holiday spending patterns. we think that's knocking to be adding enough back into retail sales in january even how strong november and december sales were. and so be looking for that. the unfriendly seasonal factors for thursday. retail sales will result in a negative print. we think that takes some of the pricing back for july into june showing a little bit more deceleration in consumer spending and that maybe some of that strength we saw in november and december retail sales was the bad seasonal factors in the other direction as well. jonathan: appreciate the clarity. good to see you, sarah wolfe of

morgan stanley. looking for a negative number. here at bloomberg the median estimate -0.2%. lisa: if you strip out some of the seasonality's the control group is set to have an increase. if you get a hotter than expected print for retail sales what does that do for market action. that i think would build on maybe not a narrative shift but may be a little gut punch. jonathan: you love this goldilocks. remember what i told you about this with the cartoons and tuning into business news. the fairytale characters getting smacked around. by economic data. >> it's pretty exciting. tracy of wells fargo, michael sheppard of bloomberg news. colin martin at charles schwab. equity futures on the s&p 500

positive by 0.4 percent. live from new york this is bloomberg. ♪

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>> the depth and breadth has surprised economist across the board and it's a much more resilient economy. >> we are not seeing any signs of it yet. >> when you look at the health of the market you still have to argue it's pretty raw. >> the billing for equities to go higher as earnings, clear is what we have to focus on. >> the equity markets is the soft landing is continuing. >> this is bloomberg

surveillance with jonathan ferro, lisa abramowicz and annmarie hordern. jonathan: the second hour of bloomberg surveillance begins now. good morning for our audience worldwide. this is bloomberg alongside lisa abramowicz with annmarie hordern. your equity market pricing back on the s&p 500 by 0.5%. plenty of jokes about the move overnight. a ridiculous move off the back of numbers that were not real. 500 basis point guidance for margin expansion turns out to be just 50. the stock fades. good news for uber shareholders, this one dropping moments ago announcing a $7 billion share buyback. lisa: which builds on the buybacks and dividends we've heard from a lot of companies. it feels like there's a new emphasis on that with the record pray pace -- with the record pace of these. this comes as instacart laid off a whole host of people and authorize shared buybacks and dividends.

there seems to be a new focus on disturbing capital in an era where people want income from those shares because they are getting a lot of money and the owners want to get some decent back. jonathan: buybacks for uber, dividend at meta, the first one. these are big changes. lisa: especially the time of how profitable someone is. these companies are meeting it and that's a shocking thing at a time when we were supposed to be talking about decelerate a growth. jonathan: the takeaway on the south side, citi services inflation is sticky. it is a nightmare on biden street. annmarie: what you will see from the white house is remember where we were and locale far we've come but the treasury secretary says she was loath to talk about anyone variability. the issue is when you look at what's going up it's issues you cannot escape.

every day americans are reminded grocery prices are going up. the only gem in this print report was that gasoline prices decreased so much and there's also potential into the summer that could pick up. >> is it too soon to talk about reverse goldilocks pray just one payrolls report. acid manufacturing gets closer to expansion. it's just one economic data point. services comes out hotter than expected. early days don't put too much weight on it. just a drip feed of hotter than expected data. >> if you get the same for retail sales how much does that play into it. the question is good news bad news. at what point is there a headwind and it's not there yet. that's the consensus from a lot of different analysts saying our base case remains positive on strong economic data and a dovish leaning fed. do we look at a situation where

bonds get blown out and stocks do well. is that the dichotomy we are seeing at a time where inflation is stickier. jonathan: we said look at the economic mix right now, doesn't favor one asset class over another. underweight bonds, overweight equities. jonathan: why would you want -- lisa: we heard that yesterday from david kelly. you can the coupon. if you want the coupon go fish. if not maybe go to equities. >> equity futures on the s&p 500 positive by 0.5%. in the bond market yields shaping up as policy -- as follows. back on the two-year down to 42868. coming up this hour, why it's time to get defensive and stocks and bonds. michael sheppard on the republican shrinking majority in the house and nvidia's relentless rise to the top.

also covering other big tech names as well. a lot to get into a little bit later. lisa: cash distribution is a new acquisition in the tech world. >> markets shaken by sticky inflation. signaling a smaller rebound following yesterday's slump. tracy of the wells fargo investment institute saying the fed is likely to put off its first rate cut until june. i'm recommending investors lighten up on the top 12 month performance including tech, consumer discretionary. tracy joins us right now. i want to recap some of your calls into this year. you said march and a rate cut in march was too early. you said market pricing was too aggressive. so far so good. you said services expansion will fall into contraction. based on what we've heard this year this one looks shaky. is that still your view?

>> yes eight is. we think we will start to see some weakness in consumer really on the margins and we are basing this on a couple of things. first of all we are starting to see delinquencies that are concerning and credit cards and loans. mortgage delinquencies have also started to rise and student loans are probably next. we are also seeing a labor market that is not quite as tight as it has been, january's print aside. it looks like it is starting to weaken on the margins with our average hourly workweeks declining and also with temporary workers also starting to decline. that's where companies can start to cut employment on the margins and so we think those two

factors are probably going to play into a little weakness in the consumer and a bit of a slowdown as we move into the next couple of quarters. lisa: what would you have to see to change your view on that? tracie: we would want to see a continuation of strong labor markets and we also want to see some reversal in those delinquency numbers. those credit cards getting up to a level where we think that is starting to be concerning. retail sales you mentioned that earlier, we would want to see those continue to come in relatively strong although like you said that could be a problem for inflation. either way we think that the fed is probably going to be here until at least june and so that is causing this repricing that we are seeing in equity markets. lisa: we've heard from a host of

different investors that they prefer stocks over bonds in a time where inflation is sticky and we are dealing with bond yields that have not fully reflected the fact the fed will cut rates but only three times this year. our stocks a better picture right now albeit defensive than bonds? >> we think equities and fixed income markets are both overbought. we are a bit overweight fixed income at this point. in the short-term, part of that curve. we think that that is a good holding place here while we wait to see if this choppiness in the markets is going to continue. the s&p 500 has been up 14 of the last 15 weeks and so a 10% correction at any point during the year is pretty normal. we want to wait for may be a bit of a reset in equity prices before we want to move some of

that short-term fixed income back into the equity markets. >> where do you see leadership on the way down? tracie: on the way down it's probably going to be similar to where it's been on the way up. the largest of the large caps have been outperforming since march. they've been dramatically outperforming small caps. we think there will be a time to invest in smaller cap companies, we think that that is not going to occur until we start to see evidence of a turn in the cycle, in early cycle is where we tend to see those perform better. we are continuing to overweight large caps and especially quality large caps. >> lisa has been talking about buybacks taking place specifically around these big tech names. when you wait for that drawdown, the pullback in this equity market, aren't you fighting those forces? how powerful are those buyback

programs? tracie: they are powerful and they can exert upward pressure on markets. we think that is going to counteract to some extent the weight that higher inflation and the fed will hold for longer to exert on markets. that's another reason why we are favoring companies with good cash positions, companies that have low debt because those are the ones likely to initiate these buybacks and potentially continue to rise even if the benchmark index as a whole has weakness. lisa: i was struck by instacart in particular because they discussed weight -- laying off as a giving a part of their force and authorizing share buybacks. is this something we will see that companies and stocks will keep doing well even if the economy starts to sour more materially? tracie: that is a possibility.

certainly fourth quarter earnings were positive for the largest of the large caps. but now companies are starting to save -- say that they are less confident that they can pass along higher prices so we think that could weigh on margins and that's probably why you are starting to see some of these cost-cutting efforts which include reducing the size of their workforce and eventually that will weigh on the labor markets and so all of this is going to counterbalance some positives from the cost cuts. >> appreciate the update on some of your calls. tracy of wells fargo. we talked about small caps briefly. small caps yesterday the russell down 4%. i was surprised to see that was the biggest one-day drop going back to 2022. we had the regional banks getting absolutely battered but we were down by something like

3%, yesterday was absolutely dreadful >> it raises the question if we have the narrative wrong saying you're missing the plot. we saw a rise in small caps heading into last year and the response to the idea of the fed pivot and this goldilocks narrative. if you are seeing a little bit taken off the top it's because of worries on the hangovers from debt especially. this is going to be one of the big debates. when do they start turning around. when is the rate security where you understand things are going? jonathan: i don't think he had that hot cpi print in mind when he made those comments. let's get you an update on stories elsewhere. here's your bloomberg brief with dani burger. dani: defense secretary lloyd austin has been released from the hospital after undergoing a procedure for a bladder problem.

he had canceled a planned trip to brussels to me with other defense chiefs and will join virtually this morning. austin was hospitalized following complications from prostate cancer which sparked fear because he waited days to inform the president and congress pray donald trump will likely drain his war chest for legal fees. it leaves him crunched for cash ahead of novembers polls. trump spent $50 million on legal expenses and could top another 26 million from an allied super pac to pay his lawyers. those funds are expected to dry up around july as the rnc triggers the start to the election campaign. it forces the frontrunner to tap the party or donors for more cash. unicredit will increase its bonus pool by 16%. the italian lender posted record profits and increased shareholder returns. the average gain will be higher than 2023 with increases between

9% and 27% according to sources. it bucks the trend of investment banks plan to reduce pools after a challenging year for their securities units. that's your bloomberg brief. >> up next on the program, democrat tom suozzi winning the new york special election. >> sending a message to our friends in congress these days. stop running around for trump and start running the country. jonathan: that conversation up next. this is bloomberg. ♪

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would you listen to elevator music all day or deal with payroll compliance? payroll compliance, for sure. gusto automatically calculates and files my taxes for me. hold up, compliance? easier? choose payroll compliance without the ups and downs. how am i going to find a doctor when i'm hallucinating? what do you think, fever monster? what about zocdoc? zocdoc? dr. castell has a great bedside manner. so many options. but dr. xichun will take your sketchy insurance. xi-chun! xi-chun, xi-chun, xi-chun! thanks, bro! you've got more options than you know. book now. jonathan: stocks bouncing a little bit on the s&p 500 positive by 0.5%. euro totally unchanged.

bond market rewinding some of the moves. double digits through much of the curve yesterday. under surveillance this morning, democrat tom suozzi winning the new york special election. >> it's time to move beyond the partisan bickering and finger-pointing. it's time to focus on how we solve the problems. >> this is to our friends running congress these days, stop running around for trump and start running around -- start helping. jonathan: ousting republican george santos, republicans currently holding 219 seats to democrats 212. like a shepherd joins us out of washington dc. let's go to those numbers. how much of that was a referendum on joe biden? >> that's a great question. this was -- many have been

looking to this election as something to say more about what would happen in november between joe biden and donald trump, this is the rematch nobody has wanted yet we are all heading towards. but also what it means for the two parties as they try to gain control of these two closely contested chambers here in washington. annmarie: it's an unnerving margin that speaker johnson wakes up to. he wants to put partisan bills on the floor like the ones to impeach secretary mayorkas. michael: this is the last thing he wanted out of this special election. he's already been dealing with this narrow margin. he can only afford to lose to republicans on any party-line vote and as you mentioned this impeachment lost a couple of republicans who were questioning whether it was justified and

whether they had it under the constitution to succeed. so if mike johnson runs into any tight spot where he needs republican votes, he runs the risk of falling short potentially again and again if this issue comes up? tom suozzi hasn't been sworn in yet but the margin will be to 19-213. >> i feel like after the election he is known as mr. border. what message does that send to the biden campaign about how important the border issue given the fact this was a top election issue for voters in long island in the northeast of the united states. michael: immigration and the border are really top issues across the board. in our bloomberg swing state poll we found six in 10 voters plane president biden for the troubles we are seeing at the

border with the surge of migrants crossing and just the sense nationally that the situation is out of control. that certainly new york which has had 170,000 migrants in recent years, many of them shipped up there by the texas governor greg abbott, all of that is coming home to roost in traditionally democratic areas like new york and voters are wondering what is the president going to do. what was interesting in the remarks last night was he talked -- he was addressing republicans and at the issue of immigration. saying we need to get things done. he was addressing people on the others of the aisle and we recall republicans walked away from the bipartisan deal on the border that included aid for ukraine, israel and taiwan. it was one that biden agreed to and was ready to sign yet under

pressure from trump they backed away. lisa: is there a lesson to this that people who are known to get reelected and people who are not our much scarier. michael: in this case, suozzi was well-known to the district. he had represented it for six years, he left congress after 2022 to run for governor, it did not work out. he still got the democratic nomination. his brand name still held some sway. what's interesting is in nassau county republicans really control the political apparatus there. the district spans both planes of nassau county so he would be the loan countywide in a way representative from the democratic party. he would be representing them. his familiarity with voters certainly help. it helped to raise money and get

spending. he was able to out raise his opponent by a three to one margin. >> is there a complete lack of enthusiasm right now and low turnout? >> there is one question about this election, of the 2024 election about whether voters are exhausted, whether they have had enough of politics. certainly nassau county executive flag to that as an issue yesterday. saying in the morning it was a little rough. he said turned out up in the afternoon as things cleared up. but it was more than just the weather clearly. people are fatigued with politics and yet the stakes are very high in this election as we head into a rematch of joe biden and donald trump. jonathan: the rematch nobody

wanted you see in poll after poll. this is why there's so much fatigue. people are sick of it. we've been talking about deals that can get through the senate but not the house. things they can get through the house but not the senate. can we talk about something that might pass both chambers and that's a bipartisan tax effort. how close are we to that taking place. michael: we seem to be inching closer and closer. one of the issues is how this gets paid for. they are working this one through the process now. we are hoping for a little bit of actual movement later this week. but i will never bet on congress doing anything on time or on schedule, especially with the tight partisan margins. there are some republicans who were concerned in particular including the state and local tax breaks that democrats in particular are looking to restore. those favor metropoli and

suburban areas of the nation but for a lot of republicans they feel that that benefits democratic districts and states more than republican ones, hence they are more hesitant with something that has that provision. jonathan: michael down in washington dc. a constructive way of framing this is this is a fixture of democracy, not a bug. it's meant to be messy. lisa: i adhere to that. jonathan: this is the bill, this is the law. lisa: you have to have people willing to consider the law before they vote on it. there is a difference between the messiness built in and a feature of democracy and a messiness that is a feature of politics and people trying to create a certain image for tiktok or instagram or twitter. it just feels a little bit different when people aren't

willing to consider the actual line items. they are just talking about some blanket ideology. annmarie: it's also harder for lawmakers to reach across the aisle and get a bipartisan bill done and the fact we are getting ever closer to november election. do remember we got bipartisanship previously. we had a hard infrastructure package and the chips and science act. when congress has had to act in certain things they want to get done they were able to. the closer we get to november every single decision will become political. >> isn't this what's basically winding you up now? you seem to be furious about the snow yesterday, the fact there was hardly any. lisa: it was not good snow. jonathan: what would you describe as quality snow? annmarie: there's no issues voting, it was lame snow. >> it fell, it was wet.

the kids get mod all over because their base with his sledding in a mud patch. you go to central park it looks like times square. everyone's trying to sled and it was just not accurate. >> are you suggesting eric adams wouldn't make a good meteorologist? lisa: you are just try to wind me up. [laughter] jonathan: these are just questions. nvidia's meteoric rise, coming up next from new york city. this is bloomberg. ♪

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jonathan: stockmarkets bouncing back. the russell and small caps yesterday down 4%, the biggest one-day loss coming back to the summer of 2022. futures bouncing back on the nasdaq by .65%, the s&p 500 higher by .5%. let's go to the two-year. about 40 basis points. that is down to 4.6265. what is interesting about the last 24 hours over the last six

weeks is that yields have been repricing higher all year off the back of firmer than expected data but equities have held up until yesterday under cpi prep. lisa: it seemed to be a gut check or got punched, as some would say. when you look at inflation moving hotter than expected across the board, you asked a really good question, is this more of a market problem than fed problem? it raises this question, though, especially if there is a broadening out of services inflation about how long higher for longer really is. it raises the question of how sticky inflation is that a lot of people thought was transitory. jonathan: that officials can carry on saying the same thing, this is why we wanted to wait. wait for more good data. and if anything, we said no to march. those three cuts, they still look ok for 2024. can that change the next couple of months? it can, but the market was priced way more aggressively

than that. david kelly and jp morgan said that it is a collective average of a whole range of views, a hard landing, soft landing, and that does not speak to something super precise, but equities are at all-time highs and spreads are tight, and with yields coming back in, a so-called everything rally the last three months, that speaks to the soft landing that the fed was looking for. lisa: just to build it up, it is basically saying that there are people looking for a hard landing, a soft landing, and it is the average of the two, and people looking for the hard landing, it's not looking likely now, so how much does this really start to lean toward over inflating in some sort of significant way? that is what markets are grappling with more now. jonathan: the u.k. is wondering if they are spooked by hotter than expected inflation data and they were not. if you go to sterling, we are

-5.3%, the u.s. dollar, 1.2555. month over month, we were looking for -0.3 m egot -0.6, so the right kind of downside to price the u.k. and the bank of england is still looking for a couple of hikes. i think those hawkish ones got clicked by the data this morning. lisa: people are now calling for next month or the month after, and it kind of highlights how different inflation story is in each region. it is not the same across the world. it is kind of supply driven, like what we saw a couple of years ago. jonathan: we are still waiting for the bank of japan to start hiking interest rates. our top story this morning, raising all of the gains they have made, sticking to cpi data in america, dashing investor

hopes that the central bank would start cutting rates sooner rather than later. we will hear from the chicago fed president and the fed vice chair later today. ultimately, are you expecting any change of communication from them whatsoever based on yesterday's print? lisa: i was wondering, does this matter? is there anything relevant from these comments? there will be, but it is compelling that analysts are saying it is important to know whether or not they say this is just one data print. if they do, that could be viewed as dovish, and you could see that pushed into markets where we expect cut rates in june and we progressed from there. if they don't and say this is concerning or we need to look more carefully and we need to see super court come down more aggressively, that will be treated as hawkish, and that will tip the scales. jonathan: first reaction from the fed later this morning. the latest on the politics, housebuilding by the narrowest margin to impeach other mayorkas after failing in their first

attempt last week. he became the second cabinet member in history to become impeached, the last one was nearly 150 years ago, and the effort is likely to die in the senate, where a two thirds geordie is needed to remove him. this is what we talked about all morning, there are things that the house are able to do and the senate will not go with and vice versa. annmarie: this is politics, not policy. the house had to take up the bill again because it was an absolute embarrassment for speaker johnson to put something on the floor that he promised his face he would do and then not have them vote at the end of the day to shored up. to get this across the finish line, we cannot just imagine how tight these numbers are. steve scalise is undergoing treatment for cancer, blood cancer. he came back to congress to take the vote. if tom suozzi was there, that vote never would have gone through. that is how tight the margins are, and that is what it is hard to get anything done, especially closer to a bipartisan way.

jonathan: let's finish on a lighter note for jeff bezos, the amazon founder and chairman selling $4 billion worth of the company stock in four days, and he has not sold shares since 2021. he still has a significant stake in the company, holding 9.3% of outstanding shares, and amazon stock is up 11% so far this year. he went through the numbers, let's hear them again, the tax implications of doing this now versus before. annmarie: he left washington state and went to florida, in washington state, if you have gains of $250,000 for the capital gains tax, 7% is what you are taxed. zero is what you are taxed in florida, so if he was ever thinking of unloading, it was wise to move first and then unload to buy a lot more. jonathan: four days, 4 billion, could you imagine? lisa:lisa: and the savings, 288

million, so what is he going to do with it? annmarie: i am sure there are lots of other things to do. jonathan: what are you suggesting? lisa: he has a yachts, islands, stylists. jonathan: building rockets. all around the clock. you should take a look at that. lisa: i spent a lot of time looking at the cruise line. jonathan: i am not sure jeff bezos is going on that cruise line anytime soon. probably a very lonely experience. how many street blocks was that? like 3, 6? lisa: it is basically a skyscraper. jonathan: my sort of idea of how to go on that cruise ship. what was it like? lisa: there was an article, talking about doing it without the add-ons and what that would be like.

i found it compelling. jonathan: let's talk about something we would like to discuss, new year, nvidia leading big tech higher ed again after jumping more than 200% last year, and adding roughly half $1 trillion to its market cap, and forcing them to chase this rally. we are joined for more by pierre ferragu. talk about the price target. last time i looked, it was 700, can this name keep beating and rating through 2024? pierre: good question. when it comes to earnings momentum, things for 2024 look very solid and good for nvidia for many reasons, which is there are way more people who need gpu's and the supply chain

provides them, so you can see the dividend, and it is going to let them do as well as they can in manufacturing. when you look at manufacturing, you look at the worst case scenario, and your execution is better, and you end up winning, so i think we are going to see that. if you look at the last 15 months, it becomes very visible, and everybody knows it, and now the question is, it tripled last year, so even if we see an addressable market that is growing very fast, doubling on

year and then doubling again year-over-year, it is difficult to know exactly where the rise starts, but very clearly, they are anticipating these revisions. jonathan: it is a chip related frenzy in the equity market. you have the buy on nvidia, intel, rod,. there is a neutral on asml. where dissent neutral come from? why are you constructive on almost a complete universe but not that name? pierre: let's take a step back. the ai market, this year, it is going to be like 80 billion, and in 2027, it could be 400 billion, so you should expect to have had readings on everybody. when you look at asml, what we

see is that they almost have their business from china, and there is a 20, 20 5% lagging of chips, and what we see today, we have seen a lot of pressure on china to spend less, and we think the lagging has been overspending for a year, and is now clearly cutting, and all these players are cutting capex so we just say, they are going to benefit from ai. in order to build 400 billion ships in 2027, we need to spend ahead of that $50 billion in order to have the lines ready,

so that is going to be a lot of business for ai, coming at a time where the business of today is going to pull back. the only one on which we have a high rating is for the simple reason that it is very little exposed to the lagging edge of china compared to other players. lisa: i am curious how much you are looking for dividends and share buybacks that could potentially support buy recommendations and the others not like asml. given what we saw from uber and a whole host of others? pierre: i don't really have that on my screen to be honest. if you are nvidia today, you have this idea of maybe your market could be $400 billion in 2027, but you have no idea.

it is like we are discovering what ai could be and how fast usage is growing, so it is certainly a possibility. we could end up halfway there, and nvidia has no control over that. microsoft has no control on that. it is going to be a game of how fast the services are being adopted and how fast the services are progressing, so if things slow down, you would be disappointed. if things start off on a billion, you could have a market under 200 billion. if that happens, without even a point in time, if you look at buybacks and dividends, --

jonathan: just to jump in, i just wanted to finish ruba. what did you make of that buyback from them this morning? pierre: well, we say in the ridesharing business, it is very easy, if you manage to get the largest market share, only a single competitor will have the very halftime, and, cash machine, and that is what happened the last four years. if you are a cash machine and the street is still relatively cautious in the way it values your business, one of the best things you can do is to buyback your own stock, so we are so happy to see that it is what we are expecting. jonathan: the stock is positive

this morning, up by 6%. wonderful to hear from you. uber this morning with its first share buyback. up about 6%. lisa: if they have the cash, that is what they are doing with it. they are growing at the hottest space ever to start a year. jonathan: a $7 billion share buyback. here is your bloomberg reef with dani burger. dani: shares in airbnb or lower after they reported strong fourth-quarter results but suggested early 2024 demand is waning. earnings initially came in strong after post-pandemic travel demand, but airbnb expects a number of nights and experiences book that it will likely moderate this quarter as demand normalizes. this stock has been on a wild ride since yesterday afternoon. the ridesharing company posted earnings that beat estimates,

but a clinical error caused them to surge a whopping 67%. since then, it has come down to 19% in the early trade. the mistake, an extra zero in the forecast for margins. they listed margins expanding at 500 basis points instead of 50. i spoke to dan ives on the brief earlier. dan: this was an episode of "saturday night live" except it was real. the scary thing here is that it actually got through. it has been a real comedy show that we have seen for years right now, and even though it is a good quarter, overshadowed by another movement. dani: a spacex rocket has been postponed, now targeting a launch early thursday with its intuitive machines aiming to touchdown on the lunar surface one-week later.

if successful, it will be the first private spacecraft to land on the moon. jonathan: appreciate the update. next, an uneven road to 2%. >> there are certain aspects of the report that push numbers higher, but as the year goes on, think inflation is going to come down. jonathan: the latest reaction to the heart inflation print, next.

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hey, brent! if you had to choose, would you watch paint dry or compare benefits plans? compare benefits. gusto makes it easier to find the right plan for my team. i think i'm going to need new glasses. no problem. you're covered. choose benefits without the mess. jonathan: one hour and 41 minutes away from the opening bell, equity bouncing back. the s&p 500 positive by .5%, yields lower by almost one basis point, and under surveillance this morning, and uneven road to 2%. >> my perspective says, ok, the

economy is cooling but more slowly. there are certain aspects of the report which push numbers higher, but as the year goes on, think inflation will slowly come down on a year over year basis. jonathan: here's the latest on inflation data, raising the last of the bond are get rally which began in december. this report throws some cold water on the fed's rate cut plans. we have been expecting three to four rate cuts this year anyway, so nowhere in line with market expectations. never bought into the aggressive pace of rate cuts that were being priced in back in december and early january, from collin martin. good to see you, as always. we have talked about this last 24 hours, was this a bigger surprise for the market than fed officials? collin: i think so, based on market reaction. market reaction was warranted. when you get an expectation like that across the board, you will see markets react, especially

given the expectations for those cuts. if you look at the fed, going back to what most officials have told us, they were talking about patience, the need for more time and data. they would like to be assured that inflation is moving down to 2%, and this gives them more time to reevaluate the landscape and see what will happen going forward. we thought march was too soon. we are still in that may camp right now. i think the odds are about hundred percent or so for may as opposed to june based on fed funds futures. we will see how that next few months of data handout, but we still expect three or four, so we don't think this is a turning point or a re-acceleration in inflation. lisa: to the point david kelly made, it wasn't that the market was thinking it was able to get six rate cuts, but it was between 12 rate cuts and three, and speaking of a hard landing,

has the market fully priced out a hard landing at a time when we look at data coming in hotter than expected and where we see growth just coming in stronger-than-expected? collin: you could argue they priced out a hard landing based on market indicators, like credit spreads, the stock market, things falling out here, and the stock market is at an all-time high, and what really surprised me yesterday was despite that stock market action, it has tightened in the credit space. we saw high yields tighten. that is indicative of a healthy economy. otherwise, you would see investors and lenders expecting and requesting higher spreads, and that was not the case. that shocked me yesterday that despite volatility in the potential for higher for longer, that we saw spreads falling more. lisa: we spoke earlier about how rich is underweight bonds because you were expecting it to

be a higher for longer environment. do you agree that in the duration set, that in the longer term treasuries, you see a bigger risk right now than you did a couple of weeks ago? collin: we don't see that. we are still in the camp that investors should gradually extend duration. if it goes up 20 basis points or so in the next week, that will not change our opinion, we would need to see yields move sustainably higher and that is in the base case right now. we still see a lot of our clients in short-term investments, and even if the timing gets pushed back a little bit, we think investors should move out a little bit and lock in yields because we don't expect a rate acceleration in inflation or the 10-year to get back to 5%, so we are not underweight bonds. we still suggest investors move out a little bit on the yield curve. as relates to credit, neutral across the board create the stronger-than-expected economy and the resilience we are seeing is a good thing for corporations, but it is

valuations that get us a little bit up there, and holds us back a little bit and from being more enthusiastic and overweight. jonathan: this conversation gravitates to fundamentals. can we talk about the psychology? in october when yields were through 5%, nobody wanted them, and then everyone is told -- has told us that if we get back up in yields, we are going to buy. ok, it is over 40 basis points, what are your clients doing now? are they hoping for another 20 or 50? collin: i don't know what the number is, but, yes, they are, and we hear that. psychology and behavioral ideas, we get anchored to the 5% we saw last year, and that is what investors were waiting for. nobody really does in then. one is the hope that yields get back to that level, and i think a lot of investors are probably scarred of what happened in 2021, and now you are at 4.2% on

the 10-year, but let's say yields do go up, that would be a hit to the value of their bonds, so they have the hope for higher yields and then you have the skittishness of the potential price declines, so we are seeing clients focus on that. lisa: hello do yields have to go before you have shifted away from duration? collin: maybe 3.5% before we get a little bit more cautious. we look at the 10-year yield now, based on our outlook for more of a soft landing, we are somewhere in the middle. we see growing recoveries, but the yield inversion we are seeing right now is not normal. from the fed funds rate to the 10-year treasury yield, it is one of the lowest we have seen in decades. assuming we get fed rate cuts not because of recession but from normalization, expect short-term yields to fall more than long-term, and settling on

the 3.5 to 4%. jonathan: appreciate the insight and reaction from charles schwab, collin martin. two-year versus 10-year, negative at 32 basis points. lisa: but it is d inverted, considering you have seen both sides with short-term yields coming in for the most part over the past six months. jonathan: if you looked for that aggressiveness and the big rally at the back end of terrible data or tremendous inflation data to encourage the fed to start cutting interest rates, not seeing it. lisa: people don't understand the cycle, including myself. what the fed reaction will be, and how much they will cut, as well as the risk premia and what they will look like. this is all unknown. territory unknown. jonathan: you are not alone, hardly anybody understands this cycle. yields coming in about three or four basis points. over the next hour, the third of "bloomberg surveillance," deutsche bank, ed mills, and david rubenstein just around the

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>> the fed is signaling to us that they will be prudent about not lowering rates. >> i think the fed has made the

right choice, they can view volatility with having a lot of bullets left in the gun. >> the fed will not make a decision based on one data point, they will take the totality of it and look at it when they decide. >> i think it is good to be patient until they are very confident that things are heading in the right direction. >> we are thinking that three rate cuts is what we get. >> this is "bloomberg surveillance" with jonathan ferro, lisa abramowicz, and annmarie hordern. jonathan: the third hour of "surveillance" begins now. good morning, good morning. this is bloomberg, alongside lisa abramowicz and annmarie hordern darling, i am jonathan ferro. big losses of small caps yesterday, down 4%, up by something like 1%, and earlier this morning, the hits keep coming, and we need to talk about job cuts, and this time it is continental. lisa: coming out, it was a german company cutting positions

that makes auto parts, and it is talking about how it can cut costs. pause. we have been hearing again and again, job cuts, at a time when rates are incredibly -- unemployment rates are incredibly high and job openings came in higher than expected. i understand this is in germany, not the u.s., but what is correct, the headlines are numbers? how do you square the two? jonathan: and many companies stateside are doing the same. and you look at jobless claims, looking at 220, up from 218, unemployment at 4% for two years, and we have seen example after example and sector after sector. lisa: upside surprise after upside surprise, job cut announcement after job cut announcement, in particular from tech companies. how messy does it become to understand job cuts given the turn having to -- churn having to do with technology, different skill sets, given the churn that

companies are holding off until they have a better sense of the stability of the economy? jonathan: and it makes communication in washington harder. annmarie: because to your point, unemployment has been under 4% for two years, and why are we seeing job cuts? and then inflation. this is the issue that has rattled the presidency. when you look at basic goods, food growing up, dining, electricity bills, and the only gem is that gas prices are going down, this starts to have an impact on consumers every single day. they go to the grocery store. that is what is concerning. yesterday, they just talked about seasonality because it is the start of the new year and there will be price adjustments, and janet yellen said look where we were and where we are going. she is really wealth to comment on just one report. jonathan: that bond market is shaking, too. and janet yellen, if that was a good prince, they would be talking all day about it. if it is bad, it is one data

point. if it doesn't fit the narrative, it is easy to not to discuss it. lisa: that is our people are pushing back and saying, you may not want to chalk this up to that right now. jonathan: first goldilocks. any further signs of stickiness with drink another wave of reverse goldilocks. we got a wave of that through the market yesterday. lisa: people are trying to price and what i know landing experience looks like. this is a fun game, no landing, soft or hard landing. jonathan: how many times did we play this last year? lisa: lots of times. jonathan: this time last year, we were at no landing before the hard landing of march. before the banks failed. lisa: i was thinking that same thing, so we went from soft landing to no landing, and what is next? we should just spin a wheel. jonathan: it feels like a ridiculous game with no prizes. equities for the s&p 500, positive by 0.5%. yields lower by two basis

points, dr. .2966. -- 4.2966. the next hour, we will talk to deutsche bank, ed mills, and bloomberg's ira jersey, weighing in on fed rate cut expectations and cpi. it again with our top story, inflation catching wall street off guard. deepak puri at deutsche bank saying that the strong cpi number, along last week's jobs report will reinforce the fed's view that a cautious approach will be needed and expectations remain that you will be the month where the first cuts will be seen. deepak is with us around the table, good to see you. what needs to happen between now and june to make that a reality? deepak: great to be here. the first thing that needs to happen is we need to avoid getting the prints like we got yesterday, but i think if you dig deeper, it is really the labor markets. but it is not really the headline number or even the

court number that -- core number that could be investor sentiment, it is the services shelter that really drove the narrative of the disinflation traction not really as embedded as what we were expecting. why is that? that is driven by consumer discretionary spending. even the main markets are so tight and there was an uptick last time around, it is hard to see how the super court can come down to a level that would be digestible for the fed, especially talking a lot more about super core and that would be the condition for a rate cut. so we have to see a couple of things. i am pretty certain that the physical inflation is there, and it is really honing down to the super court inflation. jonathan: ultimately, absent that, what is the very real risk that inflation stabilizes above target and why is that not your

base case? deepak: there are a lot of things happening, just because it is one data point, i don't think the disinflation track is going to go away anytime soon. what yesterday's number has told us, we should not count on it. it will not be a linear single-line decline on the inflation front, and we need to be prepared for these ab durations in the markets. anyone who was in keynote this goldilocks scenario, i concern now is that the goldilocks can be, you know, can hurt on both sides and inflation can start to read accelerate, which we saw yesterday, and the growth can start coming down. markets probably are not priced in for that. lisa: right now, it seems people we speak to is saying the only solution is to buy stocks. you are looking at inflation that seems to be stickier on the heels of growth but does seem to be better. you agree or is that premature? deepak: i think the u.s. stocks,

especially the big names, give u.s. some comfort, whether there was a comfort and size that started during the pandemic. i also take into account the money supply, and i was reading something from mid-1990's, you know, the bygone era, talking about the money supply and how it really propel the stock market, and a year later, they talked about exuberance, so my concern on the u.s. stocks, especially the big names, is that we are really making a lot of money going into those names, especially given the passive nature of the markets that we are living in, and it remains to be seen at 35 times the pe on the mat six how much more comfort one can get. what we are telling our clients is that a better entry point may come your way this year, so rather -- so new money, stay put

and don't start investing. lisa: you kicked tesla out, so that is why it is the ma sixg --mag six? deepak: mag seven, sorry. lisa: i was just wondering. i know it was the super six or whatever. jonathan: how much fragmentation are you seeing in the big winners of last year? deepak: we are starting to see it already, the names that have done really well are doing really well with buybacks and they have done really well this year. and then you see tesla having some issues in regards to their ability to have the same amount of profitability that they were using it. this is all with the caveat that i am not a fundamental analyst, so -- jonathan: we should probably avoid this conversation entirely then. deepak: maybe that is a good idea. jonathan: because it is not just tesla but apple, as well. there are names that are starting to underperform, unlike

two names, meta and nvidia. lisa: is this the beginning of a new cycle where they are looking for share buybacks and dividends or a certain level of performance? we were talking about waiting for another entry point . what do youweight in? deepak: there are a few things. there are a lot of technicals that are positive for the market. look at the all-time high, you look at a year out from the last rate hike, markets tend to be up mid-teens, presidential election year, so there are some positives. however, in an election year, you also have a pretty coffee book sort of performance of the markets. the first quarter tends to be positive. and then you have sideways to a long correction going into the last 100 deals prior to the election were the markets have a higher degree of volatility and tends to go down. a lot depends on what the market is sensing from the election, and then you have the election,

no matter who goes into the white house, rally. so you might get a better entry point during the course of the year may be the mid-summer timeframe than right now. lisa: is the election something you can trade around even the fact that we are looking at the longest general election in history? deepak: not necessarily, and you would advocate that your performance should be built to outlast one particular election cycle. having said that, if you just asked me if this was the time, today, to start buying into big tech, my suggestion would be, no, there are better entry points coming. jonathan: does it feel like the longest ever because it is a repeat of the last one? like it never ended? lisa: it just continued. jonathan: it never ended, six or seven years of it. can we finish on the cuts? i think we have seen it at ups, continental, and other companies. lisa: instagram. jonathan: snap the last few

years. operational efficiency is a phrase we heard from morgan stanley, is this the year of operational efficiency and what does that mean for some companies? deepak: indeed, you are also hearing restructuring and layoffs along with operational efficiencies. in a sense, what the companies need to exhibit at this point, i think of last year was the ai investments, which is still going to be a theme this year, i think the market is looking for your profit margins. you able to protect your profit margins in an economy that is going to be smaller and stash slowing and a consumer that is slowing, and inflation that might be stickier? so do you have the pricing power and operational efficiencies to do well in these kind of markets? which is quite drastic or different than we have seen the last few years. jonathan: good to see you, thank you, deepak puri of deutsche bank international private bank.

continental to cut 7150 jobs, amounting to 3.6% of its workforce. elsewhere, here is your bloomberg brief with dani burger. dani: jeff bezos sold another $2 billion of amazon shares after 2 billion last week, accounting for 24 billion shares and took place over four trading days. the world's second richest man said he had plans to dispose as many as 50 million shares from the company he founded. amazon is up 11% this year. house republicans voted by the narrowest margin to impeach homeland security secretary alejandra mayorkas. an attempt last week to impeach him failed after a deadlock. they returned to reverse the embarrassing feet, he becomes the second cabinet member in u.s. history to be impeached, but the effort is likely to be denied in the senate, where more than two thirds majority is needed to remove him from

office. trump will likely during his war chest for legal fees this summer, leaving him short for cash ahead of november. he spent more than $51 million in 2023 legal expenses and could tap another 26 million from a super pac to pay his lawyers, but as that ramps up, the funds are expected to dry up around july before the official start to the election campaign, forcing him to tap donors or parties for more cash. jonathan: coming up, next, trump's un-american nato comments lasted -- blasted by president biden. >> none of a president has vowed down to a russian dictator. i never will. it is shameful, dangerous and un-american. jonathan: that conversation, next. ♪

jonathan: live from new york city, good morning, counting you down to the opening bell. equity futures up by .5%, yields at 4.2986. biden blasted trump's un-american nato comments. >> just a few days ago, trump gave an invitation to putin to invade nato allies. can you imagine a former president of the u.s. saying that? the whole world heard. the worst thing is, he means it. no other president in our history has ever bowed down to a russian dictator. let me say this as clearly as i can, i never will. for god sake, it is done, shameful, dangerous, un-american. jonathan: the nato defense

spending on the political chessboard for biden and trump, a record 18 out of 31 nato countries expected to meet the largest defense spending goal this year. stoltenberg said that nato allies are spending more but still some have a way to go. let's talk about this topic before we move on to other issues in washington over the last 24 hours. his nato membership really on the ballot this year? it is not that straightforward, is it? >> i think the thing that i would highlight, there is policy and politics here, and on the policy side, last december, the united states congress added to the defense bill a provision that does not allow the president of the united states to unilaterally withdraw from nato. he has to give a 180 day notice to congress and then congress would have to vote for this. that is not going to happen. that is trying to future proof kind of this nato conversation

from a potential reelection of donald trump here in november. once donald trump made those comments, from a political perspective, the biden administration has been on the ropes after the report last week with questions about his age, so it allows them to pivot and go on the offensive and try to change the conversation, and i think that is why we are talking about this. lisa: the trump campaign, and we heard from robert o'brien, who said trump was giving tough love, but for the trump campaign, how much of this is a cleanup act when we are getting buildings and rooms of supporters who would actually like to see the united states standby their alliance? >> what version are we on in terms of something that trump has said and that we are kind of having the "cleanup act?" that is the nature of who he is, that is the nature of the way he campaigns. certainly, for the trump campaign, part of the way in

which he has been running the nomination so far, he has not done a lot of events or said a lot of things. the way i look at this is i have felt that this election come november is most likely a rematch and most likely going to be very close because we are going to get a different set of headlines every day, every week, every month that we are debating. does this move in one direction or the other? the reality is is that we will likely have two candidates with the majority of the country having a negative opinion, and the person who is able to win, those who don't like them, they will be elected president, and we will debate that between now and november. annmarie: can we talk about the foreign aid bill? you have lindsey graham saying that he is a no until it becomes a loan, something trump put out there, how hard is it to get this package done when the senate and house are so divided and the party itself is so divided? ed: there are very few bills that get 70 votes in the senate

that don't ultimately become law. is it this package as itself or something different? that is going to be debated, but the pressure is on the speaker now, and there is either going to be another parliamentarian maneuvers or pressure for this to get a vote. if this had a vote, this would have a majority or a two thirds majority to get it done on the suspension calendar, which is how they have been doing things recently, so the fact that republicans are going to have to defend president trump on his nato comments, that puts a little more pressure. also, obviously, last night, democrats got another boat. that is more pressure, and you just need a simple majority to get a discharge position and then you need another simple majority to pass this, so from a defense supplemental, it has momentum because it had 70 votes

and because of how close the house is. annmarie: but barring a discharge position or petition, which people are saying is fantasyland, if speaker johnson or to put this on the floor, does that mean him losing his job? ed: if johnston were to put it on as is, he would be former speaker johnston. we talked about other opportunities outside of this chart and how to get this done. we will not go into some of those arcane details of defeating the previous question, but, however, this is something that a majority of the house members would like to see, and you have seen some house freedom caucus members admit that if this were to get a vote, it would pass, so it is more about johnston not having his fingerprints tied to something that ultimately get signed into law. annmarie: between now and potentially a government shutdown in march, what do you think actually gets done out of this congress? ed: the senate is on recess this

week and next week. the house is on recess next week, so we have three days of session before march 1. that is not a lot of time. do we get another push to have a short-term cr to get it from march 1 to march 8? it is possible. do we have a short-term shut down? does the state of union address on march 7 get delayed? that's possible. we tell folks at raymond james that if there are market volatility tied to this, that disregard that because the market is always up after that, and there have been shutdowns since 1990's, since the newt gingrich and bill clinton era, and rockets on average are up during shutdown, so the overall picture from d.c. is there is a lot of physical support for the economy, and when you add in the $95 billion supplemental for defense, you add in the tax bill, which has a good shot of

getting past, as well. this support from a fiscal side is absolutely still there. annmarie: do you see any of these fiscal potential bills like the foreign aid to being attached to those appropriations or do they have to go to standalone's? ed: no, i think it gets more complicated. what you have seen in the house is a push back against the agreement speaker johnson made on top line. top line, we are going to do year over year flakka on domestic with a 30 billion -- domestic with a 30 billion increase, and if you add to it, you will have a package that year-over-year sound increase when republicans promised a decrease. that is politically very difficult, but we have also seen from speaker johnson a willingness to do things that he said he was not going to do. at the end of the day, you need to have a motioning government, even if it looks really dysfunctional through the process and the sausage making,

so i am not to hung upo on if it is one bill or three bills, but the most likely scenario, just positive for the market, is that the majority of this, if not all, gets done. i have been on that grand bargain or bust train for a while, we are looking closer to the grand bargain at this point. jonathan: nice to talk about policy and less about politics, ed mills of raymond james, thank you. it is getting harder to draw the distinction between the two. you can see in the polls, the republican party is becoming more isolationist, which is what the former president was speaking to on the comments on nato. i think it is really important to take it seriously, but when you try to draw the divide between politics and policy, if you wanted to make that policy based on what has happened the last few months, it will be difficult to do that. lisa: right now, it speaks to the idea of the deficit and how

people are concerned about that at a time when everyone is talking about increasing spending. we heard him say this bigots are on an washington, d.c. this is part of the reason why people think the u.s. economy can keep chugging along, maybe with more inflation to boot. jonathan:citi says, not a soft landing. inflation is more elevated and volatile, and this will lead to keeping rate higher for longer, increasing the likelihood of a recession. coming up, hotter than expected inflation data, and that conversation is next. ♪

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jonathan: 60 minutes and a few seconds away from the opening bell in new york. equities bouncing back from yesterday's losses, down 4% at the close with the russell positive by more than 1% now, and the s&p 500 positive by .4% at the moment. if you switch to the board and get to the bond markets, 10-year, 30-year, two-year, 4.6074, and the 10-year around 4.30. lots of people would like to buy

that and then yields go higher, we have made 40 basis points today on the 10-year. is not enough to say, yeah? are you buying that? lisa: it raises the question, are we there yet in terms of fully pricing and how long the fed will be higher for longer? i think it is fascinating, basically saying this is not an aberration we got for the cpi report with this is the new reality of a more inflationary world, and i keep wondering whether we actually price that in or if people are flirting with it, wondering if it is just a trade in? jonathan: it speaks to calibrating policy to make sure you get a soft landing and it is tremendously difficult, given the volatility that we are talking about, and the continued strength in the u.s. economy still today after talking about this for 12 months or longer. lisa: i wonder if when we write history books, i am looking forward to read someone explain what is going on because it feels like we are in a mess. i am looking forward to the

painting by numbers. how much the fiscal side of it really is putting intimate, how much are we going to say that essentially, we are doing helicopter money and that is what we are seeing on the flipside? that, to me, is a key question and where we end up in a prolonged amount of time. jonathan: years ago, joe weisenthal talked about hindsight capital. it is super, super easy, and when they write the book, we will be able to say, it was not easy. you make it sound coherent now, but back then, there was nothing coherent about any of it. lisa: you can tell the story would like to in terms of the data in terms of what to pay attention to and what to ignore. which is why what we are talking about with markets right now, the potential outcomes, they are completely opposite to one another and this is what people are debating. jonathan: another number to look forward tomorrow, we are looking for a negative print, .2%, and jobless claims, 220, the number

we are talking about. 220 is to estimate against 218. final snapshot of foreign-exchange, the dollar here, yesterday we had more than a little move, a move of one percentage point against the japanese yen, in the dollar's favor, north of 150, at 150.54, and that is just a minuscule tiny piece of strength off the back of japanese officials yesterday threatening to do some thing about it. lisa: saying it is because of speculation, which is not helpful. people said, so when do you take action? right now, they have been doing job building but they haven't taken action. i think maybe markets are sick of being whipsawed by rhetoric. jonathan: without a doubt. dollar-yen, 150.55. looking for action, not words. blockbuster earnings report showing a year-over-year revenue increase and jump in bookings, but there was one problem with a

clerical error bylyft, saying that it was set to grow 500 basis points and not 50. the company cfo issued a correction, saying the press release was incorrect, and after an initial 67% surge, it is now trying to keep up with the main competitor uber. we will catch up with the lyft ceo, and i imagine they have questions for david. lisa: do they have a copy editor? seriously, who reads it? annmarie: the cfo at the end of the day has to read this over, right? lisa: it is just process. let's talk about what happened that day. sit-down. jonathan: it was like an episode from "snl" except it was real they said. lisa: this is like a level of incompetency that suggests, how do you build confidence that there is not incompetency of

that nature elsewhere in operations? jonathan: i would love to talk to someone who is sure on how they feel about this. this is beyond a clerical error. this is not a simple 50 to 500, that is a huge, huge difference. and the amount of people who would have read through that and to miss it, a friend of mine said, it is a situation where you see what you would like to see and what is not actually there. so maybe that is what the company would like to say, 500, but they are not. they are at 50. completely different. lisa: do you think there was some intention? jonathan: i cannot imply that. lisa: but it was convenient. jonathan: it was convenient to squeeze out shares. we can talk about the consequences, but no idea what the motives were. lisa: they will have to, straight -- they will have to demonstrate how it was not intentional and does not show complete incompetency. jonathan:jonathan: it does not speak well to the management and

the broader management when you can make mistakes like that. let's turn to politics, democrats picking up a seat in the house. santos previously held the seat. so it is 53.9% to 46.1% and 93% of the votes counted. it is seen as a referendum on president biden and the immigration policy, currently holding to 19 to 212 geordie in the house and it gets slimmer -- majority in the house and it gets slimmer and slimmer. annmarie: if you are a speaker like johnston, your majority is getting whittled down day by day, and when you have partisan bills through congress, it will be challenging. every member has to show up for the votes. to say it is a referendum on biden i find interesting because tom suozzi is a different candidate, and he knows the

district. i think it is name recognition id. jonathan: the nature of the race will be interesting as it gets closer and closer to the election and around the election for the national campaign, will it be a referendum on biden or will the candidates put distance or daylight between themselves and the president? annmarie: that is what tom suozzi did and what the connecticut governor did, saying biden should be closing on the border. you are seeing democrats from blue cities point the finger at the president biden to do more when it comes to the border because it is now impacting them and their constituents. jonathan: politics, more price action, yields lower, down five basis points on the two-year, and they are adjusting their forecast after cpi data came in harder than expected. global bonds erased the gains they made since fed powells summer. . -- since fed jay powell's december.

let's catch up with ira jersey to talk more about this. did anything change for you with that print yesterday morning? ira: it did not change, and if anything, it grows because we thought inflation was going to come out slower than what consensus was pricing. we talked about the idea that the treasury teams broke even, and them are get rate they were pricing, as well as the number of cuts being price for this year and what was unrealistically low, so, you know, we were talking about having five or six interest-rate cuts by the fed have maybe they hiked, before the year, and very wait to see what the data is in the second half of the year before the fed can actually cut more. jonathan:jonathan: can we talk about the data? we had a conversation with morgan stanley and they talked about the gap between ppi, how

big is the gap at the moment and what explains it? ira: it has grown, and we will see on friday with the ppi data comes in. the interesting thing about cpi ppi, that does have a good relationship with things like corporate earnings, so that is one of the reasons why perhaps it shows businesses still have pricing power, even though a lot of the inflation we are seeing is in the service sector, so if you look at the services and wages and where inflation was yesterday, it was almost all in services, and that means if you can -- as long as you can keep your price increases more than what you are paying employees and wages, you are likely to see a decent object and earnings from an economic perspective. importantly, you mentioned the top of the half-hour about tomorrow's retail sales report, that has been the key because if we get a retail sales control group coming in of the what is

expected, i think that will be a big sign that the continued expansion we are having is still on track. lisa: what sales floor, the front and/or long and? ira: probablye the frontnd -- probably the front end, you could wind up pricing out and having another interest-rate cut that we have. even governor waller mentioned a couple of weeks ago, when you get wound up with two year yields around a quarter percent, so another 15 basis points or so higher than where we are now, i think the front-end still takes a brunt of it because the fed will be on hold for longer than anticipated. lisa: jon talked about this note from verna clark at citigroup romans ago, where he said stronger core cpi is not an aberration. the u.s. economy is under a

regime where inflation is more volatile and higher for longer will be the case. do you agree? is this a stickier inflation, where this rate is not as restrictive by the fed as many think? ira: i think that is possible, and i think that is the point i had in my discussion with a lot of investors yesterday. there is a camp that believes the fed should increase interest rates more. i think that is unlikely that they could start hiking because the first thing we need to do, and i think that the federal reserve has to acknowledge is that they have to draw out a lot of the cuts being priced, not only for this year but 2025 three quite frankly, pricing out those cuts is as good as their hiking. the fact that you have this inverted yield curve and the expectation they will cut over the next 18 months is easing financial conditions. i think that is something that the fed has to acknowledge and i

suspect in some of the discussions and speeches we have over the next few weeks, that they will say, look, we may not come out i'll if inflation continues to run at over 3% -- at all if inflation can continue to run a 3%, and we could see yields continuing to move higher. lisa: blackrock talked about how they don't like bonds that much based on there are concerns of supply and inflation, and i wondering whether we will start worrying about options again now that yields are higher? is this a new focus for people, to worry about the deficit? ira: i think so. the options have been odd because the january auctions do not go well and the 10-year and five year in particular have done much better than anticipated. we had thought they would be choppy year, but it was good. i suspect that there will be

some bottom picking and folks who are saying short the market, where if you look at some of the survey data and the position data that we look at, it does suggest that the market is leading mont -- leaning modest and short right now, so you may have some people adding a little duration as those get higher, particularly as we get up to around 4.4%. that is the next important technical level on the 10-year, a 50% fibonacci retracement, and that will be my focus. above 4.4, you could extend the selloff more, but at that level, i think we will see more. jonathan: ira jersey, thank you, of bloomberg intelligence. these traders on wall street, a romantic bunch. a little poet, roses are red, violets are blue, inflations are sticky, and so are you two.

lisa: is that your valentine? jonathan: happy valentines from wall street, without a doubt. just a beautiful thing. a bed of roses. lisa: do you celebrate? jonathan: stories elsewhere, here is your bloomberg rate, with dani burger. dani: donald trump will likely drain his worchester legal fees, leaving him crunched for cash ahead of november. he spends more than $51 million in 2023 on legal expenses and could top another $26 million from an allied super pac to pay his lawyers, but as his four criminal cases ramp-up, funds are expected to dry up around july, just as the official start to the election campaign is triggered and forces the frontrunner to tap donors for more cash. jeff bezos has sold another $2 billion of amazon shares, after he already spent $2 billion last week selling the stock. regulatory sales account for 24 million shares and took place

over four trading days. the world's second richest man says he plans to sell as many as 50 million shares. shares of amazon are up 11% so far this year. shares in airbnb are lower in the early trade. they reported strong fourth-quarter results suggested early 2024 demand is waning. earnings from the company initially came in strong on the back of the continued post-pandemic travel demand, but airbnb expects a number of experiences will moderate the quarter as demand normalizes. that is your bloomberg brief. jonathan: next on the program, $100 billion cash. >> we are continuing to invest. there is an exciting side to the business, and we do make investments in our positions. jonathan: more on that, next. counting you down to the opening bell, 45 minutes away. positive by 0.6%. live from new york, this is bloomberg. ♪

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jonathan: live from new york city, good morning. 9:30 eastern, 42 minutes away from the opening bell. equity futures at the moment positive .5%, bouncing back from yesterday's losses. yields are up after how to than expected cpi report, down by not even a basis point, 4.3084 on the 10-year. alphabet, $100 billion cash pile. >> we are continuing to invest, there is a lot of extraordinary upside, and we do make investments in our positions. there is a lot that is exciting going on in the world, so we are looking across the board, starting within the business, then to investments, acquisitions, and then capital.

jonathan: you can watch the full conversation with alphabet president tonight on the david rubenstein show peer-to-peer conversations. david is catching up with us right now. good morning. david: do i for having me. jonathan: ruth has had a storied career, not just silicon valley but wall street. has faced existential crises in the past with morgan stanley right at the epicenter of the financial crisis. did you get the sense that alphabet feels like they are facing one of those right now? david: she has lived through prices with morgan stanley were it became very close to bankruptcy and they survived. as the cfo, she did a great job and was recruited to be the cfo of alphabet and google. now she has been promoted to be the president chief investment officer, so she has the highest job you can get is a non-engineer at the company, and you have a cash pile to invest,

so she is a popular, for sure. jonathan: it feels likejonathan: ai is the direct, potentially the existential threat to the core business of alphabet. did she talk about it? david: we did, i would say she says it is an opportunity because all microsoft has gotten a lot of attention and strong in ai, google has ai capabilities, as well, and when they put that on their platform, it is expected to enhance the use of people. lisa: i would like to talk about sharing purchases, uber announced a $7 million inaugural sharing purchase. we have seen a lot, meda with their new dividend. is this the new playbook but it is essentially not about pie-in-the-sky, not about metaverse, but it is just cold, hard cash? david: it is hard to make a lot of acquisitions these days with cash because the ftc don't seem to be approving many so that is a factor and secondly, they are not making a lot of cash, and

there is a tax on shareholder, so it is a modest tax, so i think if you have got a lot of cash, giving back to shareholders is good, and it is hard to make acquisitions of size these days without having regulatory problems. lisa: you think you will see this more? david: i suspect you will see more for the time being. if you have a lot of cash, sometimes they don't like you to do share buybacks, and you are not likely to make acquisitions either, so it is a difficult situation. lisa: do you expect cash to be deployed into sports teams more frequently? david: i expect probably not. jonathan: that was the question i was going ask. lisa: [laughter] david: i think individuals, to be honest, public traded companies don't typically buy sports teams, at least in the united states. they do overseas. especially wealthy entrepreneurs are people who have the cash to

do that, i suspect you will see more of it because it has risen dramatically the last couple of years. when the new york yankees were bought by george steinberg, i think it was 1970's, we paid roughly $8 million for the team. when the baltimore orioles brought to baltimore 1954, the purchase price was 2.2 million, so these teams tend to go up in value, not down. jonathan: there is a feeling we reached the saturation point for the saturation point further competition for sports tv rights and we have reached the limit for how much a franchise is worth, would you push back against that in some way? david: people say this is the highest price people would pay for anything, be it inflation or so fourth, but everybody cannot watch every game, and even so, these prices have gone up.

take the most recent super bowl game. more people watch that than any television event since the moon landing in 19 629. there are a lot of people out there who watch sports and there's nothing wrong with it. jonathan: today like american football or sports? because football has dominated tv ratings. what can they do to get there? david: more people go to more major league baseball games and football games, but a lot of people are showing up for the games, and the tv rights, there is no doubt that nfl dominates television. if a top 50 shows on television history, probably 45 or so are nfl games, and it is just unbelievable. lisa: if someone is tuning in and they don't know why we are talking about this, it is because you have invested in the baltimore orioles, almost $2 billion. jonathan: no dancing around it. lisa: i'll just go directly to

it, this is ridiculous. why? is it a nostalgia plate or because of the investment for the valuation? david: first, i, from baltimore, and i root for the baltimore orioles and i should point out that the league has not approved mia. i have to be approved, so a deal has been announced between the current owner and a group that i put together, but it cannot be to the too distant future, but i am interested in it because i would like to give back to my hometown. i enjoy sports, and i think it is a very good investment opportunity, so all of those reasons. lisa:lisa: what is the courtship like?do you have to explain what you would do or give them a sense of your commitment to baltimore? i am just curious on the process. david: they asked if i would go on "surveillance" to talk about it, and i said i would do it. that is the main reason. i actually think that anybody who sells a sports franchise is

not want to sell to somebody who will ruin the franchise. you have to say why you think you can make it better than someone who already had it. so i think we can do a good job with it, but we will bring back a lot of well-known people in baltimore, cal ripken is a good example, so i think we assembled a good group of people who care about baltimore and one of them is mike bloomberg. lisa: ok, i have heard of him. jonathan: i did not know he was a nouriel supporter. david: i think he has given more money than job hoskins -- then johns hopkins who has given, so i think roughly $5 billion, so he cares about baltimore and was happy to participate, as well. jonathan: and possibly the red sox a little bit more than the orioles, maybe. he might drop by the desk after this to make sure i am not getting in trouble. david: i think his main sport is golf, but he does like baseball.

jonathan: international investment in sports internationally, are you expecting more international investment in american sports? are we going to open the doors for the saudi's? david: there is a certain xenophobia in the united states with investing here. if saudi investors, chinese investors and russian investors would raise eyebrows, to be honest. the americans tend not to be is global in a sense, so in this premier league, it is a global sports. american football tends to be more of an american sport. nba basketball is becoming more global but you are more likely to find american entrepreneurs find these teams and global companies or foreign firm. right now, only one nba team has a sovereign wealth team or fund investing in it. sovereign wealth funds have not been approved by the nfl or

major league baseball, so at some point, sovereign wealth funds will probably be a must but they are not right now. jonathan: we have got to go, thank you. david: my pleasure, thank you. ♪

manus: good morning. battle for the renaissance of the equitable. uber flies high. >> everything you need to get set for the start of u.s. trading, this is bloomberg: the open with jonathan ferro. ♪ manus: coming