>> the fed is beholden to the inflation data. >> we are still in a higher interest rate regime. >> how much easing we will get we are not sure. >> it's a hard equation. >> we have to keep an open mind about this cycle because is no real parallel for it. >> this is bloomberg surveillance with jonathan ferro, lisa abramowicz and annmarie hordern. >> let's get your week started. for our audience worldwide good

morning, this is bloomberg surveillance. together with annmarie hordern i'm jonathan ferro. negative here by 0.4%. we spent the last 18 months or so staring at the u.s. economy waiting for recession. the rest of the world is already in one. the u.k., japan, germany, china struggling to make this economy stand up. >> given the fact they cut rates by the most going back at 2019 and the market shrugged. no one really cared because it wasn't enough. if you reached a point where they don't have the confidence in the economy how do you restart the consumer spending cycle. jonathan: they are facing what many consider to be a classic recession, consumers trying to deleverage facing the prospect of lower prices in the property market.

the issue needs to be addressed with fiscal policy. whether they want to go down that road or not. >> not necessarily because they have conviction in some sort of strength in china i think it's interesting there were some job cuts overnight and really this speaks to a weakness in demand from places like china that isn't resurrecting and that's the question are we reaching a new era where they won't support the economy with fiscal. >> the difference is remarkable right now. the equity market of the united states just off all-time highs. m&a picking up another big deal announced. capital one agreed to by discover financial services of $35 billion all stock deal to create the largest u.s. credit card company by loan volume and the first question i was thinking of. is this one to happen or not. >> we've seen from the biden administration take on a really

robust look when it comes to antitrust deals. we saw there was a record for merger enforcement activity from the ftc, issuing this executive order order about making sure there is that in the market. penguin, simon & schuster. american airlines jetblue. does this go through. lisa: penguin and simon & schuster are not exactly acme's of strength and growth. you talk about spirit and jetblue struggling. when you talk about discover, having some serious issues. is this coming from strength where they want to dominate or to survive. this is one of the key questions behind this deal. jonathan: all stock deal. how may times of you woken up on monday morning and heard all stock deal. never data. lisa: this is not a matter of

giving someone a payout because the market isn't allowing it anymore. this is about perhaps survival, consolidation of different types of efficiencies of scale we saw that with other deals as well. this isn't coming from a place of looking to dominate the industry and some sort of new jp morgan rival type of way. >> earnings from home depot. i will give you the fourth quarter sales number -3.5%. the estimate was -3.63. this is what they see for sales in the outlook. -1% getting an estimate of positive .18%. the stock is down just a touch. lisa: fourth-quarter earnings-per-share missing versus the estimate of $3.30. boosting their quarterly dividend by 7%.

we have seen this time and again even if the sales are not there and the earnings is not there, the dividends and share buybacks will be there. there is a sense of needing to return capital to shareholders. >> let's turn to the broader price action. equity futures on the s&p 500 negative by .5% on the s&p. might not be the data, the fed speak. may well be nvidia earnings after the close tomorrow. >> people are saying this will make or break the sentiment for the entire world markets because of the fourth biggest company in the future of everything braided this is sort of the question. how much is nvidia one company and how much is at the representation of the ai fervor that has supported global markets and a way many did not expect braided jonathan: down just a touch. coming up on this program steve looking ahead to nvidia is the

earnings report of the week. pressure building in washington to deliver aid to ukraine. enda curran as chinese banks looks to the backstop. the earnings report of the week may be even the quarter. nvidia reporting tomorrow. steve of federated expecting growth to expand for the magnificent seven saying inflation will moderate, cuts will come and that will eventually support a broadening out of the equity market to the less extended parts of the market. steve, good morning to you. nvidia, earnings report of the week for the quarter. >> you've got an earnings season right now that shaping up to be pretty good. it looks like double digit earnings growth. we've got 40%, 50% earnings growth from tech and the rest of the index is down or at least flat. if you look at how that's expected to progress over the year by the time we get to the

fourth quarter of expectations materialize we will have the rest growing at something close to 20% while the mag seven slows closer to 10. that handoff really needs to occur between the end of the year and now for the markets continue on this rally. lisa: we haven't seen broadening out. it's been one step forward, 15 steps back. what will be the trigger for some sort of shift. steve: i don't know about the 15. i think what we've seen happen is the bond market got hit itself. when you got in the fourth quarter of last year and the fed started to pivot, you saw a broadening out. the rest of the market really started to gain its footing. then the bond market got ahead of itself so we are pricing back those cuts pricing and stickier inflation. fewer cuts and you see the market retrenching back into the

mac seven. what you will see is those ingredients for cuts to come through. you need the fed to start cutting. we think that starts in june but we view this as an opportunity to buy into those areas. lisa: dovetail this with nvidia's earning. steve: don't think they are stealing from the rest of the market. i think even when you see a broadening out we are not expecting them to be in trouble or to have absolute declines we just expect those returns to normalize is earning growth starts to normalize and spread out. we expect them to be market performers but some of the other parts of the market have lagged and started to take the lead. >> amazing to see over the next couple of months or so we pushed rate cut calls. yields are repricing higher. it's not just about the strength of economic data it's about

inflation still running hot. if you just frame last week, yields up on the back of hot cpi and then equities down .4%. basically nothing at all. does that exist connect for you? >> i'm a make news here and, to praise the fed. they've been right in understanding some of the goods price deflation was transitory. and not overreacting in a dovish way. in terms of the equity market when you take a step back you have rates that are likely to fall this year. may be less than the market was hoping for a month ago but they still likely to fall. we've exited the earnings recession. looks agree with you 10% earnings growth this quarter. how often do you see a combination were you have rates falling and earnings were covering, it's hard to sell off too hard in the face of those two things. >> do you believe the mandate is

coming its conflict after the data so far just last week. >> i think the labor market is still strong and inflation is stickier than some may have thought. it's higher for longer but from our perspective we think it's two to three cuts. it's not zero. two to three cuts with earnings growth that's accelerating, that's not a bad environment for equities. >> why is it your optimistic about small caps when they seem to be most leveraged to rates. steve: in the short run when you saw six cuts priced into the marketplace and realize indigestion was likely i was in january saying the same thing. you can see some downside opportunities. on small caps, cyclicals. if you are a long-term investor or a medium-term investor and you think the end state is rate cuts and earnings growth the three accelerating and the

procession is not to materialize small caps her leveraged to not going in a recession bring rates are also falling so we are looking at this and saying you folks want to throw the baby with the bathwater we will pick it up over the next couple of months and we think benefit when rates fall. lisa: we are seeing home depot lose a bit. calling 2023 a year of moderation. where are the babies? how do you find them? steve: what you're looking for is look at the equity market for a second relative to the bond market. the most expensive parts are those most leveraged to growth. think about high yields and how tight spreads are preyed the parts of the economy that should benefit from the recession not materializing and should benefit from rates falling our cyclicals, small caps, it is

dividend payers. those have been parts of the market that are the cheapest. if you try to take a contrarian tilt, you use the weakness in this delay of rate cuts to build positions and we think you will benefit. jonathan: the year of moderation was 2023 given the growth we've just had what would you call 2024? >> given that 5% growth. it's not exactly moderation. i'm trying to wrap my head around how much this is specifically a home renovation story. i'm curious to hear on the call what they speak to you with this. how they view the commodity disinflation to some degree but also the fact they're sick of renovating their homes had nausea because they couldn't move. jonathan: speaking for yourself here? of course not. we will follow that and the fed speak. longtime friend of the program over the years saying the risk of cutting too quickly and then

reversing i think that's not just a problem of the bank of england. that's clearly a waste federal reserve officials. >> we heard that from a host of others. this is the reason at the same time that changing the forecast or taking of the tail risk of recession. if people are saying they are not get a cut rates nearly as much because they're worried about reignition of inflation, that will be more damaging than we are pricing out the case. >> jefferson bellman will speak. >> it's good to be really break -- great. if they have an issue for their speech. jonathan: the fed is coming in later this week so you have plenty of fed speak. -5.4%. steve will be with us to the next 15 minutes or so. but scheduled update on stories

elsewhere. here's your bloomberg brief with dani burger. dani: ukrainian air force says it shot down 23 drones and missiles fired from russia overnight. the regional governor says three people were hurt. president biden says he's willing to meet with house speaker mike johnson to discuss a for ukraine in israel. as to the -- saying the death of alexei navalny adds to the urgency. the british bank is going on a major cost-cutting drive. bloomberg reports barclays is overhauling its operations and reorganizing it. those will consist of a retail bank, corporate bank, wealth management arm and investment banking division and the u.s. consumer bank. china is ramping up its support for troubled property sector with its biggest cut ever to a key mortgage reference rate. they announced lenders will slash their five year loan prime

rate to 3.95%. it's their first cut since june as policymakers try to relieve the poverty crisis. jonathan: president biden turning up pressure on house republicans to pass a for ukraine. >> they're making a big mistake. walking away from the threat of russia, the way they are walking away from their obligation. jonathan: that conversation up next. good morning. ♪

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yields going nowhere. under surveillance this morning, president biden turning up pressure to pass eight for ukraine. >> they're making a big restate not responding. the way they're walking away from the threat of russia, from nato, the way they're walking away from meeting their obligation. it is shocking. >> here's the latest this morning president biden saying is willing to meet with mike johnson in order to pass the aid package on capitol hill. following the death of russian opposition leader. terry haines joins us right now to talk about this. let's get straight to the president's response. does he in your mind and opinion continue to project weakness to the rest of the world? terry: on ukraine he has done for quite a while.

i take my inspiration from the bloomberg website and what i get is columnists talking about the ineffectiveness of russian sanctions. part of my point is they are badly enforced if at all. combined with late provision of weapons or no provision at all and on top of that a lack of being able to use all the tools of the presidency including the defense production act to top off stores for the united states and allies. what i get is claims to be as forcefully supportive for ukraine as possible but in fact it has not been. all i'm suggesting is this is a whole of government problem not just a democrat republican problem. lisa: if he says he's ready to meet with speaker johnson could that mean there is a path for ukraine aid to get passed in congress? >> i think there's plenty of

path to get passed in congress. my basic point on this has been that process aside washington people love to talk about process because it's easier than talking about substance is it makes us all feel smart while were doing it is that three quarters of the houses in favor of ukraine aid and i can justify that five different ways. it's much more likely than not that this happens. there are a variety of processes to make this happen from a discharge petition to this assent -- suspension calendar. i do think it's likely back to john's point though i will point out something in biden statement that you gave me. he's willing to meet with speaker johnson. why doesn't he demand he sits in the situation room and talk turkey. energy and the executive which is needed here is to force the issue. i don't see a white house trying

to force the issue. lisa: tina fordham over the weekend was talking about the role of the former president trumpflation a is he more than a president in waiting. is he some sort of second president. house republicans, at least the speaker are to worry to call and up-and-down vote because if he did it would pass and this is something that needs clarifying. is all of this being held back by the fact republicans face primaries even before november's presidential election. terry: i think it is easy to talk about trump's hold on the party and all the rest and i'm happy to dispute that to some extent elsewhere but the way politicians think is they are thinking in terms of their own bases. part of their own base feel that what they need to be doing is to provide aid to the border first

before they get to any foreign aid question. whatever else that is it's a defensible position. but this is political reality no one is attacking right now. everyone's not trying to reach consensus or force consensus until they actually do. the speaker situation will be a tough. lisa: there was speculation the death of alexei navalny would restart talks with urgency on aid to ukraine. do you buy that at all? terry: sadly i don't. his death among other things i think is not very much of a surprise firstly. secondly, u.s. foreign policy gets into trouble when we are rationalizing on the basis of someone's death. you look at jamaal khashoggi for

a rough example of this. the reaction from biden was saudi arabia was -- then we were fist bumping with saudi arabia and then talking to them about post middle east conflict where we were going from there. navalny's death is not a problem. lack of willingness and understanding to do something is. >> capital one discover financial services they want to make something happen. does this administration let them? terry: let me put it this way without looking at the merger in great detail. the problem is the regulatory authorities tend to see four-week competitors rather than strong ones. both of those parties i think at any of those trying to do this more broadly needs to address

that, get over the hump pretty quickly because what's can happen is people don't want the merger to happen are going to use that as a rationale for making it stop. jonathan: good to hear from you. with us around the table still. steve. what do you make of that? the attitude of the regulator to do something like this going through. steve: you are not seeing excess in the space. just like you are not seeing it in the ipo markets. i would agree which is you have a couple weaker competitors trying to get together for strategic reasons for survival i think you need to look at that closely as a regulator. in addition regulators have the duopoly between visa and mastercard. i don't understand why it would be such a huge issue. i hoped it would be able to see past that. lisa: how much do you buy this type of transaction announcement

at its face value. is a sort of a threshold for the value of a deal that you can get behind and invest in versus one you say is to subject to regulatory scrutiny. >> your genesee how that premium is priced in, we will have to see how the names open up in trade over the next couple of days. i think generally speaking we have more regulatory uncertainty because you had politics not involved and an administration that is not friendly to m&a activity. >> from here until year end equal weight s&p or market cap weighted s&p. >> i think you are building that over dominance between now and that first rate cut. we think that's more of a june event. and then we think you benefit from that in the second half of the year. if you don't then something went

wrong. jonathan: steve, thank you. we talked a little bit about this last week. maybe the data and repricing of rates shock the market more than the federal reserve. stephen line saying two to three cuts for 2024 still basically saying this market can do ok. lisa: so many investors and analysts say they've been pricing in two or three rate cuts that they never thought about six rate cuts. it was at tail risk of a potential recession. that was someone else and they were worried about that. it's pretty much everyone which means they have taken off the table so let's go. jonathan: coming up on the program how deep our earnings. a look at the housing market. you're watching bloomberg tv. ♪

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jonathan: live from new york city good morning. equity futures pulling back on the s&p. we are down about 0.4% on the s&p 500 on the nasdaq down by .6. met -- a very minor week on the s&p 500 in the face of real repricing again the bond market. let's go to the two-year, the 10 year. this equity market was down not even by .5%.

the 10 year at about 42772. this was on really strong retail sales. this was on the back of hotter than expected ppi. pushing out for the wrong reasons. >> people look to the retail sales and said that's not indicative of weakness. it seems people are repricing out the chance. no one is calling for recession right now. it's good to be goldilocks at the same time. we see some hotter than expected inflation cool off just a bit. it is the perfect world for stocks. it is not perfect for bonds. jonathan: that's the ultimate question. when you push this through the fx markets. dollars stronger. five consecutive weeks of it. let's go through it.

the u.s. economy is still ok. jobless claims lower. standing up to global weakness. the u.k. in contraction. germany in contraction off a recession. japan in contraction in recession. china, a slumping property market rating we would be talking about a dreadful global economy. a global recession. >> which is maybe why we are not seeing these respond to the geopolitical risk. here is the question, the u.s. remain in its own bubble. everyone we ask you week said yes and the reason why is partly the fact consumers spend with fiscal stimulus that keeps getting pumped into the system and that's been a defining feature of the u.s. recovery is the helicopter money. >> that's what china is reluctant to do. under surveillance this morning.

president biden's middle east advisor will go to egypt for talks ahead on possible israeli assault on raufh -- rafah. the biden administration telling netanyahu to plan for the evacuation of civilians in southern gaza, more than 1.4 million palestinians have sought refuge in the area. things are getting more tense day after day. annmarie: i would point to the draft resolution from the united nations, the u.s. will be calling for a temporary cease-fire. this is something they've been reluctant to do and shows how their thinking is growing and how frustrated president biden is. >> is this sort of catering to constituents or is this actually some sort of push to get some cease fire? it's clear the tone is shifting. annmarie: there is also one line

at the moment that says such a major ground offensive should not proceed under current circumstances. i think that gives netanyahu some wiggle room. jonathan: is this about international concerns or domestic issues. annmarie: on one point they do want to make sure they put a lid on what's going on the middle east. the who theis say this vessel has sunk over the weekend. but domestically massive amounts of pressure on this administration. michigan, there's a group that voted him -- for him that has abandoned biden. jonathan: that's the latest on foreign policy. capital one agreeing to buy discover financial and what would rank as the biggest global deal of the year. the $35 billion all stock agreement would create the largest u.s. credit card company by volume. capital would pay -- capital one would pay 26 .6% premium.

the deal is expected to be done by the end of 2025. regulatory approval is the big one. >> especially given the fact spirit and jetblue was stymied. this is not an administration friendly with big tieups. these are not tieups of great strength behemoths this is a tie up of two companies the feeling they could be a whole lot stronger together and might be facing some issues. annmarie: i look at the recent report and i think regulators will hone in on this. research on high-level concentration of evidence that apply anticompetitive behavior in the market. top 30 credit card companies represent 95% of credit card debt. the top 10 dominate the marketplace. what i'm saying is an administration that has not looked friendly on these massive tieups and mergers will go to

data like that to prove their point. lisa: capital one is one of the biggest auto and other loan lenders. if someone wants to cater to lower income families this is the one you want to continue to exist and thrive so is this a way to allow them to keep making those loans while getting prime customers through discover. there are all sorts of arguments for this to go through. it's fascinating that this is going through not from a position of strength. whether it gets through i will leave that to you. >> isn't it funny the credit card company is financing the deal with equity and not debt. it is due as i say not as i do. lisa: why would they want to pay the 25% they charge. jonathan: clearly they don't. let's get to this story here. china ramping up support for struggling property market. banks are slashing the loan by

rate to 3.95%. this marks the biggest ever cut to a key mortgage rate. lenders are looking to boost demand for falling apartment prices. investors in china looking for signs of stimulus out of the national people's congress early next month. lisa good luck we have been waiting for this for a long while. shein is going to reopen. the economies get a boom just did not happen. lisa: it reminds me of literature class in college, these questions of winter they actually going to come to fruition when it doesn't seem like they want to go that route. there also not giving consistent policy signals for international businesses and investors. is there a clarity of message or a clarity of messaging of what they want to get across. dreadful data. lisa: why would anyone want to invest in there.

the most bullish they get is it can't get much worse. jonathan: policy became increasingly predictable and even more unpredictable with the latest earnings prayed home depot kicking off a busy week of retail earnings the company reporting a fifth consecutive decline in revenue one week demand, comparable sales fell in the fiscal fourth quarter. home depot announcing boosting its quarterly dividend. drew, let's go to the headwinds. what are the headwinds for this company and we expect them to last through the rest of this year. >> we think the environment for the consumer is can remain challenging through a lot of this year. one of the things that's unique to the home improvement market is we are still battling massive demand from the pandemic. if you look at the share of

personal consumption you are seeing a reversion to the mean and if you look deeper the portion of personal consumption expenditures related to home improvement specifically you'll see there's a pretty sharp drop since peaking early in 2021 so we think there's a little bit of reversion left for the industry as a whole. in the meantime the consumer is stretched and you see personal saving down a little bit. credit card balances are rising. at the same time we are looking at housing transactions that are the lowest since the mid-90's. if you play it out you do start to see rates moderate, you could see a rebound in existing home sales which would help the in -- home-improvement space into 2025. lisa: there are two points. there's one where consumers get tired and don't have the cash given credit card bills and others. the second is there's been

absent stasis in the home market. if rates come down and you get more transactions doesn't matter the consumer is stretched or is this an issue about transactions? drew: i think it matters. if you look there's been a pretty strong relationship between spending on home-improvement projects and moving. it stands to reason as you move and prepare your home for sale you take on certain projects. you make those improvements, we seem data suggesting movers will spend two times more someone is not moving. that relationship is broken down over the last couple of years. you have people disincentivize to move because they had such a low rate on their current mortgage. you also have the pandemic factor where people were investing more in their home on such a more important role. that relationship has -- we

think that relationship will resume later into 2024. think rebound existing home sales. we think it will provide a tailwind. lisa: he said basically -- jonathan: he was talking to you. lisa: if you are locked in an exhausted by some of the same laws again and again. here's my question. is this idiosyncratic story about homebuilding and home renovations or is this a broader economic story about the ability for consumers to spend. drew: i think it's both. i do think the consumers under pressure. home-improvement industry has some unique factors going on because they are so tied to what's happening in the housing market and as we've seen over the last year and a half, housing issues have frozen at this point and transactions are,

dip -- are depressed and we think that is on the demand. >> to a couple of rate cuts make a difference to the story. lisa: they did to -- for mortgage applications. you saw suddenly mortgage applications. what's that threshold. 6% on a mortgage rate? if you look at it double what it was. it's you can understand this shock. jonathan: i was saying this to tony dwyer a number of months ago because he casually drops he is a 3% mortgage. the biggest brag post-pandemic. you basically tell us every week now. i need rates down 400 basis points by 35%. lisa: for you to get out there

and do this. if the economy is good. where would you get promoted to. if you started earning more in society -- jonathan: i think i've got my annual review later this morning. [laughter] we can talk about what it would take. lisa: for you to buy an apartment given the mortgage rates. jonathan: let scheduled update on stories this morning. >> bayer plans to slash its dividend. they will offer investors only the legal minimum requirement under german law. the companies face thousands of lawsuits claiming that roundup weed killer causes cancer which it denies. they've already planned to spend

to resolve litigation. the russian president may be violating u.n. sanctions with his latest move to boost ties with north korea rather prayed putin gave north korea kim jong-un -- leader kim jong-un a car. they say it is an auris of russian-made alternative, luxury vehicles are on the security council's list of banned items for export. there's little the council can do to punish putin. california grappling with extreme weather and another atmospheric river. the national weather service warns of difficult conditions after an expected loll today. l.a. and san diego are at risk for significant flooding with five inches of rain predicted for some areas. it is expected to pass quicker than the one earlier this month. jonathan: china ramping up for its property sector. >> it's bigger than the market

expected in the market also looked for cuts more on the five-year. but it's not in a change the picture. >> that conversation just around the corner. this is bloomberg. ♪

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work together to make sure your portfolio and wealth are managed in a tax-efficient manner. it's what you keep that really matters. why not give your wealth a second look? book your free meeting today at creativeplanning.com. creative planning -- a richer way to wealth. jonathan: stocks are negative here. down one third of 1% in the bond market. yields coming down -- going absolutely nowhere. the euro is just a little stronger. positive by .2% prayed china ramping up support for its property sector. >> sales came down a lot in housing but the price formed clear. either they set up some state fund or they had to take men --

and on the deliver. bigger than market expected in the market looking for a cut on the five-year. it's not to change the big picture. jonathan: chinese lenders slashing this by 25 basis points. the first cut since june. the move marks and intensified focus on the widespread property crisis. joining us is enda curran. let's start with the downturn in china. do rate cuts help or they need to do something more targeted on the fiscal side? enda: it suggests some urgency by the policymakers in beijing moving this by scale. there 25 basis points will oversee mortgage holders help them get into the market there and perhaps of the margins turn things around. the entire world has looked towards china wondering when

they will start to turn around the real estate sector and the don't think this move will be enough to do that. the market reaction was pretty muted. short-term comes to a near-term money market rates. i think the authorities to get back on their feet. >> in your experience or coverage of japan are their echoes of the balance sheet procession playing out in china currently? >> that's one of the big talking points between china and japan. that's one of the key differences when it comes to that debate. china not only battling deflation, a much worse position than it was this time last year when people expected a post-covid rebound and that's been more the big surprise from the whole world looking at china not just that it's in a slump but it's hard for authorities to intervene and take the big

measures that would've been suspected and it's feeding this narrative may be the authorities are now more focused on the security side of things rather than on growth where they would have in the past. the readings were pretty -- were suggesting things in china we have the mpc coming up, gathering officials in march but will give us the next big readout. lisa: i did notice the number of travelers surpassed what we saw pre-pandemic. our chinese travelers spending more to mess tickly than they were internationally? enda: travel did rebound over the holiday. but the spending did not rebound. doing an analysis on that suggesting the spending remains below. it speaks to the idea look

resolve recovery of the margins, people getting on a train or a plane again offering free relations with china. they are not spending what they did in the old days. there's no real sign yet of a turnaround. with this move we saw with mortgage rates no one expect that concern, but a big question is when will authorities pull the levers that inject confidence into the world second-biggest economy. >> also subdued was foreign direct investment the lowest level since 1993. do you expect this to continue given the geopolitical concerns regarding beijing? enda: always tough to get a clean read. i think broadly speaking there's no doubt investor sentiment towards china is in a much more negative space then could have been imagined even a few years

ago even if they are not pulling out of china neither are they expanding their investment growth prayed we hear warnings on the chambers of commerce on those relations about their members not necessarily being gung ho foreign investment into china. there's no doubt geopolitics is weighing and forcing companies to work elsewhere. -- look elsewhere. poland's in morocco gaining when it comes to geopolitics. lisa: there's a question of what kind of stimulus they could do. they could really reignite some sort of growth optimism at a time when they've got enough bridges to nowhere. enough villages that are shrinking. what you looking at when it comes to fiscal stimulus they could do something with respect to confidence in growth. enda: measures that would rev up

the real estate sector is probably one. a multiplier in that economy you can argue may be in 2025% activity coming from the real estate sector so if they can go in there and clean up the banks or cleanup the property developers and inject capital on that side of things i think you hear a lot of people say bill turned around quickly given the invested savings for homeowners in the real estate sector. we do have this big congress in march where we get the readout on the growth and we get the readout from what they plan to do in terms of government spending. a lot of folks in their will work -- will wonder prayed -- will wonder. lisa: the american company announced it was cutting 3700 jobs. i keep wondering how much this situation affects china.

how much the commodity sector is been suppressed simply because china has not been there is a source of demand. how much is that the story that the commodity sector is a read on the weakness and lack of building in china? >> this is a confusing one. on paper i totally agree with you. but it's -- all of china slump asked -- last year, i don't know what it's trading at the moment but it used to be where r&r went, china's economy was going braided there is investment going on, commodity demand investment going on to china's economy. there spending on infrastructure for sure it's not the kind of gangbusters commodity boone driven by china we've seen over the past couple of decades. there certainly is demand and i would point to the area where china is. jonathan: could we finish on the

compare and contrast with the u.k. and germany and elsewhere. how different are those stories compared to what's playing out in china? enda: i think some differences. post-covid china has disappointed braided out there it's geopolitics, the u.k. and germany has been at the brunt of the energy spillover from an impact to the war in ukraine. that's been part of the story. no doubt weighing all of this is the geopolitics. it's much more fragile than it was a decade ago. some of these industrial export nations. jonathan: thank you as always. the latest on the global economy. idiosyncratic or not, it adds up to a global downturn. >> a lot of people are expecting

the great moderation in the third quarter to actually be moderation later this year which is a reason why the fed doesn't feel comfortable enough to cut rates? jonathan: unemployment still at 4%. lisa: the reason it's been so difficult getting your arms around this. home depot might be struggling. jonathan: coming up on this program, sam of cfra, jeff feldman on the latest in retail. liam of exxon mobil. and amanda lynam of blackrock, that and a whole lot more. equity futures on the s&p 500 pulling back by one third of 1%. yields going nowhere. this week a sprinkle of economic data a ton of fed speak and the number one earnings report of the quarter. tomorrow after the close, nvidia

just about 36 hours away. this is bloomberg. ♪ 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.

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>> the fed is beholden to the inflation data. >> we are still at a higher interest rate regime. >> how much easing we will get we are not sure. >> it's a hard equation to say. >> they will have to keep an open mind about this cycle because is no real parallel for it. >> this is bloomberg

surveillance with jonathan ferro, lisa abramowicz and annmarie hordern. jonathan: good morning for our audience worldwide this is bloomberg surveillance alongside lisa abramowicz together with annmarie hordern. the equity market pulling down on the s&p 500 prayed a rather big single name, nvidia. year-to-date up by 46.63%. only six or seven weeks into this after a massive move last year. >> not only did they beat by 10 to 20%. here's the question, what's good to be considered a beat by nvidia what reports tomorrow. will be getting above the expectation on the street or will they have to smash it out of the water. this market is priced in that. >> looking at the fourth biggest

company by market capitalization in the world which went to the entire market prayed how much has it really shifted the narrative single-handedly versus being in an echelon of its own that people can look past braided >> do you think it deemphasize the importance. based on what we expected to happen let's go through it. data comes in hotter than expected. yields adjust higher again. yet equities are doing ok. is it about monetary policy? maybe it's about the earnings of big powerhouses. >> that's what david was saying that this was entirely an earnings driven story and the reason he's revising upward his forecast for this year. that's only an upside of 3.5% so how much further can you see some of these forecasts go. can this market hinge on the

gains of a few behemoths or do you have to see broadening out? at what point to other companies benefit from the ai boom by creating efficiencies and is this a pipe dream that's two years out and will be see this monetized. jonathan: we will go through the headlines. i want to bring up david cost and braided november the price target 4700 prayed december a new price target. let's wait a couple of months and see how this plays out. lisa: basically saying they're coming in better than expected. again, you have seen this dominated by the big tech players. you are not seeing into the same degree as the small caps which is why it's been a tough sell. jonathan: we can deal with the results and the outlook.

fourth quarter revenue, a one hundred $73.49 billion. adjusted eps for the quarter 180 against an estimate of 165. let's go to the outlook as well. 20, 25 adjusted eps. a little north of seven dollars. lisa: we will dig through what this is because of better pricing power, whether it's because of what you're seeing from lower end consumers. we are seeing vizio shares jumped 13% in response to this offer from walmart. this is a television production company. it company the designs and sells tv's, data, advertising. what is walmart looking to do right now? is it more interested in the hardware or is it about the data and advertising and capitalizing to become a real rival of

amazon. jonathan: looking to buy that deal in cash. i've seen that headline drop right now. either way it's different from what we are from capital one and discover. lisa: this is the difference. not as much strength, that's trying to become a stronger player. this is trying to dominate. this is a company looking to really be competitive with the big tech players. it's one of the hirers in tech staff. jonathan: completely different story at capital one and discover financial services. a $35 billion all stock deal. the question for so many is whether the biden administration will give them the green light to go ahead. annmarie: in washington dc when it comes to these big mergers, the answer -- matt schultz over at lending tree had to this to say singh given the recent

challenges of discover will this be what lisa is talking about, a white knight to fix this troubled player or will the market view it as it means less competition on the board. >> discover is up by 15% in the premarket. broader market looks like this. yields repriced higher again last week. just a touch lower. lisa it wasn't about stronger output. retail sales disappointed. this was about hot cpi and ppi. this was mentioned in the note -- earlier in the evening. lisa: stuart keiser assange good news is still good news. we will think about this going forward. about may be soon this becomes bad news. i will dovetail this into more from the walmart earnings where

they reduced forecast and talked about the softer more selective consumer braided it might not just be a one-off. but a longer-term story. does that play into the strength people are betting on. jonathan: if we had the audio version of his notes, the tone would be different. he probably would've use that voice. lisa: good news was good news unabashedly. he would say cut it out with this good news is bad news. he's basically saying for now maybe we have to see and i think that's a shift. jonathan: let's say that for sure. coming up this hour here's the lineup. the s&p coming up its first losses. joe feldman of taxi on. the fed hones in on commercial real estate. economic data snapping five weeks of gains.

market volatility has been consistent with the s&p 500 returns after large round numbers prayed short-term declines but they have been fairly short in duration. get into that for us. why buy here and not bail. >> i don't think you should bail unless you have when we will be seeing the in creases and relatively shallow. traditionally what we find it advances a few months after recouping what it lost in the market before stumbling by 8%. but then advancing once again. if you look at other historical indicators, the market being up in january, of the full year it's been a higher 100% of the

time since world war ii. all-time highs in january and february by almost two to one for the full year. and increase the batting average. there are several other indicators that say this market could end up being strong this year but the timing is maybe we do end up with some digestion in recent gains but that would end up being a buying opportunity for the strength occurring in the final quarter of this year. lisa: is this a viable dip? >> of 0.42%? lisa: that's the tip line of last week prayed the second week down in the past 16 weeks of declines. that the negativity we are talking about in a market that seems to be going up. >> that is true. when we did have that decline

you recall the day after the s&p 500 said -- set it's 11th all-time high in this year-to-date so investors thought even a short-term ahead of earnings reports that this was a buying opportunity. what i think there will end up being a bit more of the digestion of gains ahead, i really see the market undulating between may be the 5100 level, 47, 4800 level. really giving investors time for the earnings to catch up to the multiples, etc. before we advance further once the fed does finally cut interest rates because i think they are sticking to their slower to lower interest rate mantra. >> there have been a lot of conflicting data points. we got weaker than expected retail sales but hotter than expected cpi and ppi raising the

question of the wrong kind of inflation. we had commentary on a more cautious consumer saying they're being choice full talking about how there will be more caution expressed in their shopping habits. does this give you pause to something of a greater weakening but maybe people are recognizing. >> i don't. i think it's management's job to manage expectations. this will be in the 57th quarter out of the last 59 in which actual results have exceeded estimates. we enter the court are thinking we will see earnings up by 2% now earnings are expected to be up by 5.3%. in consumer discretionary category is expected to show improvements not only for the fourth quarter of 23, all of 23, first quarter of 24 but also improved outlooks for all of 2024 so what we are seeing is management doing their job. jonathan: let's talk of the

contribution from the magnificent seven. how vulnerable is this market to that earnings report. >> there is vulnerability there not only with nvidia but also just tech in general. historically whenever we've been bumping up against that 30 multiple on forward 12 month earnings, tech itself has stalled. the next question is do we end up seeing an improvement in participation rates. whether you look to the 50 day, 200 day or a combination of both we are now back above average for all of the sub industries of the s&p 1500. participation is there. 54% of the stocks are positive on a year-to-date basis. we are seeing contribution but the true leadership is coming from the magnificent seven, of the sensational six, the fabulous five.

jonathan: the numbers getting smaller and smaller sam. looking ahead to when nvidia earnings and a whole lot more after the close tomorrow. identifying these pockets of improvement. those voices are getting drowned out by monster gains in stocks like nvidia. lisa: trying to lose low -- look at all of them. how much can they whittle it down to one name in the entire market. >> one name at the moment is nvidia and those reports, after the close tomorrow afternoon. let's get an update, here's your bloomberg brief. >> capital one has agreed to buy discover in an all stock deal. it creates the largest u.s. credit card company. the price represents a premium on discovers last close. capital one says the deal will build a payment numbered -- payment network. the deal is expected to be

completed by the end of this year or next. it would be the biggest global deal of this year so far. russia's war with ukraine is nearing its third year. the ukrainian air force says it shot down drones and missiles fired from russia overnight. the regional governor says three people were hurt. president biden says he would meet with house speaker mike johnson to discuss stalled aid for ukraine and israel. the death of a -- president biden says all the death of alexei navalny makes this more urgent. the u.n. calling for a temporary cease-fire accord into a draft text copy. so far the biden administration has been reluctant to take steps against israel frustration is growing. that's your bloomberg brief. jonathan: more from dani later this hour. >> we can certainly see there is some stress on the low-end

consumer. using delinquencies, there is stress in the consumer but right now the higher consumer is still consuming braided >> the latest on home -- consuming. >> the latest next. ♪ gobble gobble. i've seen bigger legs on a turkey! rude. who are you? i'm an investor in a fund that helps advance innovative sports tech like this smart fitness mirror. i'm also mr. leg day...1989! anyone can become an agent of innovation with invesco qqq, a fund that gives you access to nasdaq-100 innovations. i go through a lot of pants. before investing carefully read and consider fund investment objectives, risks, charges, expenses and more in prospectus at invesco.com. that first time you take a step back. i made that. with your very own online store. i sold that. and you can manage it all in one place. i built this. and it was easy,

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>> stocks pulling back just a touch. down on the s&p 500. just moments ago soft landings are unlikely precisely because inflation force policy rates higher for longer. just a little lower on the 10-year. under surveillance this morning the consumer showing signs of weakness. >> you can see their stress on the low-end consumer. delinquencies coming up.

there is stress on the low-end consumer. therefore you don't see that balance there yet. there some real stress under the hood of the system. >> here's the latest, shares of home depot falling after reporting a fifth straight quarter decline in revenue. the year of moderation. offering softer guidance. consumers are being choice full and expecting sales growth to slow. joe, let's start with walmart braided the question we love to ask on this program. if they are doing well is the country doing for the -- poorly? >> it seems that they've won the holiday season. i think walmart strength reflects some of that.

i do think the consumer's choice full. we've seen units of some of the discretionary categories increasing. we do see some pretty good strength and continue traffic in positive territory. >> are nevertheless earnings season. walmart shocked us all. we said oh my goodness we will enter this spiral and now they're saying maybe not so much. what do you see as they are pricing power and ability to look past some of the weakness we saw the seem to have shifted in the goods sector. >> i think walmart always tries to lead on price. we do pricing studies on a regular basis. so you're always going to get the best value their for whatever it is you are shopping for. i think they will continue to do that.

we will see over the next couple of weeks with earnings is 2024 is looking to be year for normalization. the year is starting somewhat soft. as they progress and resort to normalize with inflation and deflation. and then kind of get back to essentials and discretionary. lisa: i ask this at a time when walmart is trying to work more directly with amazon, who is its competitor? is of the targets and home depot's or is it amazon. >> they will tell you there competing with everyone on a daily basis. it's been interesting to see them compete against amazon. walmart's e-commerce business was strong during the quarter and they continue to execute well. they are competing day to day depending on the category with everybody out there whether it's

target, home depot, amazon and they are competing quite well. we are pleased with what we saw out of walmart. i thought the guidance for 2024 was pretty solid braided -- pretty solid. annmarie: there was a question whether they are trying to sell smart tv zoar learn more about consumer data. >> my guess is they are trying to get more on the data side of things and trying to learn more about the customer and have better access to the data and be able to leverage that. clearly the question on the earnings call when they do speak with wall street analysts is certainly something we would like to know more about. selling tv's is a big part of it as well. it's a good chunk of sales they can drive business with. jonathan: how much has home depot situation is out of its

control? joe: a good amount, maybe floor enter core -- and decor, is out of their control. consumers did a lot of spending during the pandemic at home. they are making choices where to allocate dollars and it is shifting back a little bit towards discretionary or is expected to. the home has been an area of weakness, home furnishings, improvement. maintenance you're doing on the day-to-day home depot and blows i think will face challenges in the first half of the year. consumers are avoiding heavy investments at the moment. just as they try to get food on the table and get back to a normal level of purchasing braden lisa: this raises a question when will we start to see some of the artificial

intelligence gains play out in places like retail. they are buying the data and looking to try and monetize that in a whole host of different ways. what you seeing on the ground in terms of how that shifting productivity as well as being able to offer new streams of revenue for these retailers? joe: artificial intelligence including generative ai in particular is starting to come in, it's still early days for retailers. walmart is on the forefront and we are starting to see them on a regular basis so they should start to see some of the profit in 2024 and beyond. it's still early days. finding ways on the consumer facing side. better wayfinding within stores. can come from ai.

it's a great buzz word. it will be sometime before we see 2025, 2026 and beyond. >> what is your top pick this year. >> it's hard to bet against walmart. they are performing quite well. we like them a lot. >> i know you've got some calls to get on. >> walmart just to get through the numbers adjusted eps of the estimate of libido north of seven dollars. >> talking about more robotics and warehouses as they remodel. i keep thinking about this. essentially a certain point these companies that know what i'm going to buy, where i'm going to buy coffee.

how i will respond to getting a paycheck. what do they -- how did they advertise to me? how will this be a new model that transforms the way i can control myself. >> you asked the question about ai and chatbots. >> that's not the future. the future will be targeted everything. i don't know what the future is. jonathan: they are just swipe your credit card before you know about it. you're just a look at the screen and it will buy things for you. i'm trying to reimagine where the revenue streams will come from. if they can sell that data they cross a line. but they could potentially monetize that. >> i'm struck by what the guests said. at one point they were talking about their really good at managing expectations.

versus a more cautious in retail sales. >> that speaks to the consumer not doing too well. which have been pretty robust. a string of better-than-expected economic data for the last six weeks or so. >> when you go to the grocery store even if you're making more money you still find to discuss -- disgusting you have to pay 30% more than you did. >> i'm not get a name the store. this happened yesterday, a pack of cherries. i did not buy them. $20 for a pack of cherries. put them down and walked away. i don't care how organic they were. ♪

equity is pulling back by .25%. no real drama, yields our pricing higher. look at the two-year with yields of double digits and down about four basis points down to 4.59 and on the 10 year at 4.26. annmarie: this is people pricing

out inflation do we understand the inflationary impulses of we are getting it wrong with cpi and ppi. jonathan: he has been talking about this for a long time, soft landing is likely because fed holding rates higher for longer. lisa: one of the challenges has been the long and variable legs. will it be a continued debate? will it shrink the economy to have rates higher for longer? jonathan: the euro is just a little stronger and the rest of the world is really struggling. china is struggling to find the floor of its housing market. the u.k. is contracting, germany is contracting, japan is contracting. lisa: how long can that

continue? when we talk about the fiscal backdrop where people are still giving money being pumped into advancements. jonathan: thus the difference between the u.s. and the rest of the world. the u.s. proposing the un security council solution warning israel against an attack in rafa will have serious implications for regional peace. office population has quadrupled with one million palestinians seeking refuge. lisa: the u.s. has been reluctant to back any kind of cease-fire. annmarie: such a major ground offensive should not proceed under current circumstances.

and if they were to do a ground invasion they should protect these palestinians. jonathan: here is one watch this morning. from home depot, the stock is sliding after fifth quarter of decline. walmart also reporting softness and vizio. the whole company is starting to sound and look a whole lot more like amazon. lisa: at what point is walmart attacked company? they are hiring more tech people than anyone else? i'm struck by the diversity and

size. how depot is in the home market but out walmart they can capitalize on whichever level. jonathan: capital one agreeing to buy discover and a 35 billion deal by creating the largest credit card company. capital one saying the deal will build a payment network that can compete with the largest payment networks. lisa: when you look at what is going on in washington. they promised they would look more carefully when it comes to

antitrust enforcement. annmarie: is there potential that this still does not go through because they will say this is too big and ruin competition? lisa: who is the they will say this is too big and ruin competition? competition for credit cards? is it other credit cards or affirmed? you start to wonder whether the rationale starts to be no and how much conviction can you have when there is a huge differential? jonathan: antitrust is open to interpretation and thus the ultimate problem. if you say it will be bigger than citi and j.p. morgan. lisa: it will not be the him

and a boom because of regulatory uncertainty. when people have the certainty with what they are dealing with how do you understand whether something will be studied or not? jonathan: closer to the energy sector, some tension there. maduro says he will -- venezuela has made territorial claims. it is wonderful to catch up with you. i want to go back 10 years to 2015 when this discovery was made by exxon. can you give us the size and scope of how big the opportunity

is in the world? liam: this energy demand continuing to grow and we continue to focus on lifting people out of poverty. importantly, as we continue to grow, and nowhere is a better example the right here in guyana. this is in 2.5 meters of water and we have been successful in a short period of time. over 6000 barrels a day in four years in the average development time from discovering the well to bringing it online is less

than five years. thus the half the industries average. this country has fantastic rocks that produce oil. a great supportive government, dealing with lower emissions and spreading the benefits across the country. as a kind of opportunity that comes up across rarely. right now, it's in our top three deepwater developments around the world and at the pace we are continuing to grow it will be right up there. it's lisa: there's a real question about security concern considering there have been

threats from maduro. what discussions do you have to ensure your contract gets in forest and you're able to produce the amount of oil you would like? liam: we are staying focused on executing our operations within our contract area and that is what we have been doing and what we intend to continue to do and as we have talked about, this development has years ahead of it and were not going anywhere. we are developing and spreading the gains to guyana. we take precautions from an operational perspective to the extent that we can but fundamentally our focus is on doing what we say we are going to do with him our approved

contract area. lisa: venezuela's president was talking about barring you from exploring waters near guyana. are you planning on exploring those areas? or is that matt in your purview? -- not in your pure view? annmarie: are you concerned about diana's ability to defend itself. we have seen in satellite imagery him building military at the border. liam: that's a matter for the governments. given the nature of our

operations we are informed into the nature of those discussions. we are supportive of guyana's position. jonathan: one thing you mentioned is the technology required to explore these deposits. the imf said the terms of the 2016 deal and guyana were too favorable to exxon and not febrile enough towards the government. would you say the current situation justifies that agreement? liam: absolutely. this is a risk/reward business. this was less than nine years ago this was the deepest water in the world proposition that

only companies with our technology and financial capabilities could take on in the contract was appropriate to that risk. as we continue to explore we are successful in some parts of the block and unsuccessful in others. this type of risk/reward is appropriate for the nature of what were doing. jonathan: you've talked about developments like this that help countries get out of poverty. there are governments trying to phase out fossil fuels before guyana has the opportunity to develop. what are your thoughts on that? as an oil producer you will have to talk to your book a little bit. are they worried about how fast the timeline is to develop this?

liam: again, we're are developing these resources with industry-leading ambitions and we will be providing natural gas to supply onshore power generation and that in itself will half electricity cost to the people of guyana and comes with significantly lower emissions. there is a value chain potential from low admissions officer oil and bringing gas to the local market feeding a lower carbon future and allowing the country to grow and expand.

and potentially other alternative energy is the economy grows. but the ability to get started and grow and take gas to fundamentally trance -- transform the economy. jonathan: we will speak to the president in 45 minutes one of the questions we have been asking is what we can expect if we pursue offshore development? liam: we are expecting to see that in the first quarter of this year. jonathan: that's still the timeline? liam: yes. jonathan: we will catch up with

president ali later this morning. a fascinating time with this country and their dispute with venezuela. the deal that they struck with exxon was too favorable to exxon. if there's some kind of military operation you can see why it's such a high risk for exxon. lisa: military leaders with specifically after exxon. where is the redline and what will the response be from the united states military to protect their right to drill there? annmarie: the biden administration has come out

supporting guyana. their assessment has been as small in scale at the moment but this is a concern when you see companies are out there drilling. jonathan: the president of guyana joining us in about 45 minutes of time. >> the regulator has to do their job in the market. they are coming in and spending time to look at that. jonathan: thus our conversation next. buy from new york, this is bloomberg. ♪

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: equities pulling back a third of 1%.

user changed on a 10 year and on the two-year. under surveillance this morning regulators are closing in on cre risks. >> fed vice chair for supervision saying regulators are focusing and on commercial real estate loans because of the heightened supervisory attention. a mental lien at black rock research has been doing her. are the regulators on top of this? >> i think the whole market is

focused on it including a lot of market participants. for us, what we have been watching is does this flow through to the broader system? our base case is we don't believe it does but there are more price valuations that could reset. jonathan: how idiosyncratic is this? there are some loans or deals, is it unique to a place like new york produce seed around the country? amanda: it's idiosyncratic within cre classes.

for us, the issue is there are areas industrial, hotels and self storage that are doing well . there is more price reset to come and multi-family where supply is more well absorbed. we know that banks on the smaller end of the spectrum have more exposure in the key will be is this an earnings event? but this is a multiyear project to correct. lisa: there will be people who say we've heard about this for two years and nothing has come to pass. how do you place this in terms

of your understanding of risk? is this a price 10 risk or an opportunity? amanda: outside of the situation in the headlines, we have seen loss take-up. a 20% default with the 50% recovery. you have seen reserves take up to 10% but overall cre's are in the low single digits. on the lending side, bank lending remains tight but it is using. it is not getting worse. it is tightening at a moderate pace but cre where the senior loan officer survey called out along with auto loans to remain

tight over time. it is more challenging giving the higher cost of capital for sensitive asset classes but you have structural advantages. there are investors in the space that would argue there is opportunity but we think there is additional price correction taking place. lisa: you said the key for corporate credit investors is the fed's willingness to cut rates proactively as opposed to potential weakness. ultimately this is the end of the hiking cycle and we are talking about proactive cuts. how far does that get you to bullishness and credit? amanda: i'm not sure is 75 basis

points will make or break any of these companies in terms of additional financial flexibility but there is more clarity on the macro backdrop and the fact we are not getting any more hikes is critical for risk sentiment. the yield backdrop has been important for credit investors. spreads are optically too tight, we have been tighter than this when yields were much lower. as a combination of a few things. the fed is signaling that they're willing to come proactively, lower quality borrowers ability to tap the market. the combination of those things has boosted risk sentiment coupled with the fact that you can deploy capital.

we are often asked is the risk to spreads tighter or wider? i wouldn't be surprised if we saw that spreads could move tighter from here because of the yield base demand. jonathan: talk about m&a and how they are financing m&a? how important is debt-financed? amanda: important for investors. whether it is equity or cash that has shown variation over time. part of it is the function of companies managing their capital structures. it is been a benign skew for block holders so a fair amount of equity or cash and equity fund it deals. pharmaceuticals have been --

cash deals replaced with dead. -- debt. jonathan: the first thing you thought of with this capital one deal? lisa: i think amanda's point saying it's not bad for credit investor is understanding that if you look at certain companies they are buying the debt and they are getting an option on that to get at par. jonathan: acquisitions will benefit stockholders? coming up on this program, the chair of securities ed mills and

the president of guyana irfan ali. that's coming up here on bloomberg. ♪

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truth be told the economic data is still strong. this economy is slowing but is not recessionary. this economy has more resilience. don't dive into a premature conclusion. this is bloomberg surveillance with jonathan farrow, lisa abramowitz and ann marie herder and. jonathan: take a deep breath. doesn't that sound like therapy? from new york city this morning, good morning. equity futures are negative 5.3%. fed minutes are 24 hours away.

and the big one is nvidia on wednesday. lisa: this week is earnings front and center. what more can we hear from fed officials that will push the needle? can ia continue to ai and can nvidia ruled the world? jonathan: can they go double digit higher? lisa: if we can do something different what a sight sentiment? the hardware story has to shift to a software story. everyone wants to pour into chips. at some point everyone will have the chips they need. jonathan: nvidia is the big

winner again on the s&p. we are pulling back by .3%. yields look like this. we are going nowhere at 4.27 on tenure. the euro is stronger by 0.2%. coming up the software, peter t chir, ed mills and the president of guyana. they are seeing more and downside risks come of the market has skewed heavily to bullish on the subset of names between positioning and price action.

peter, i am pleased to say joins us right now. fed minutes or nvidia which matters more? peter: i think the fed minutes will just be reinforced to expect fewer cuts and to expect them further spread out. jonathan: have we been cutting for the wrong reasons? peter: last week i was there for thinking i was conservative but now i'm thinking i had too many cuts price 10. with ppi and cpi, have these job numbers been true or untrue? if we are seeing growth in the job market these things make sense but if not, we talk about recession again. lisa: you are a breath of fresh air with people saying we are

bullish. you see downside potential. do you think there is something materially different coming down the pike? peter: this cascade of people trying to buy the dip and it fails. i think we get a very dramatic few day. period. there was a lot of option by an put selling. people buy the dip were rewarded but people have committed all of their cash and heavy on nvidia. if something goes wrong i can see a cascading sellout. lisa: what does it mean for nvidia to disappoint? how can that shift the narrative of a market? peter: i don't understand the

company well enough to understand individual stocks. i think people are expecting a good be and who is turning around to buy? it's lisa: we have seen upgrade after upgrade. there is a feeling whether it is the ai boom that it will broaden now. do you push back against that? do you see something else driving the cuts? peter: retail sales confuse me because they were too good. all of a sudden you have this myth and we track the credit

card data. remember post-covid everyone pay down their credit card. you are starting to see delinquency rise. if the consumer rolls over then we go back to recession fears. jonathan: i'm listening to the words you are using when you discuss the data, true or not true, sketchy. what are you suggesting? peter: i think a lot of our data collection is old-school. we do surveys and who knows what the data means and then applying these analytics to the data to do seasonal adjustment. i am highly suspect. i would love to see us spending program on how we collect data

so people can make decisions on accurate data. lisa: what is the lodestar? before conspiracy theories say that everything is manipulative. peter: if you look at the fed in term of the jobs data. what good is that initial number when you're getting these low response rates? we need a way to collect data better and more timely. we went through the european debt crisis, covid. lisa: the reason why there will not be a soft landing because the fed will have to hold rates as high, do you believe that?

there will be a more dramatic tightening in the next couple of months? peter: i thought we had three because this year but part of my thesis is the fed will not want to cut it in november because it will look like election manipulation. i think they will have to be cautious in what they do around the election so they are not portrayed as affecting the election outcome. so maybe you only get one or two cuts. jonathan: do you think it weighs on them? peter: i don't think they wanted to but it's difficult in this day and age when people are talking about monetary policy and social media makes it easier and everything seems to divide into 25 hated, 25 love it.

it can be horrible for them to deal with. i don't think they want to deal with it. but sometimes you have to be cautious. jonathan: can we talk about the deficit? will this take on greater importance as the year progresses? peter: you start seeing articles about it. everything quiets down and when this was coming out and bullish at 5% people were jumping ahead and talking about supply. now it's six months later the average coupon is taking up an federal action will spur that. you will have one side saying we do massive tax cuts and the other side will do massive spending and the markets are going to start realizing the

deficit is going higher. china has to defend their own markets. annmarie: if you fixate you have to talk about entitlements which is the third rail and no one is going to campaign on cutting social security and medicare. jonathan: except nikki haley? annmarie: with the she said 65 was way too young and then she wouldn't say that number again. she is talking about it but she won't be the nominee. no one wants to talk about this because it means serious cuts to entitlements. lisa: you're trying to wind me up. everyone is going to realize

that costs are higher. this is not an unknown. peter: one thing that will be easy to point to. annmarie: chairman powell says it is urgent but i would characterize this is urgent. jonathan: let's give you an update on stories elsewhere. dani: california is dealing with another atmospheric river. l.a. in san diego are at risk for significant flooding. five inches of rain is predicted. shares of home depot are low where with a fifth consecutive quarter of revenue declines.

they saw fourth-quarter sales lower. a slowdown in construction underscored the demand for home improvement. the ceo said 2023 was a year of moderation. capital one has agreed to by discover financial. it's a 35 billion agreement and capital one will be paying a 26% premium to the close and it's expected to complete by the end of this year. that is your bloomberg brief. jonathan: on this program the white house intensifying efforts to secure aid to ukraine. >> three quarters of the houses in favor of ukraine aid. it's much more likely than not that it happens. jonathan: live from new york, this is bloomberg. ♪

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jonathan: under surveillance this morning the houses identifying efforts to secure aid to ukraine. >> three quarters of the houses in favor of ukraine aid it's much more likely than not that it happens. i do think it is likely. jonathan: president biden saying he is willing to meet with mike johnson and order to pass the 95 billion aid package following the death of alexi navalny.

before we get to for nato want to talk about the prospect of the big deal of capital one and discover. from your perspective, how likely is that this administration gives that deal the green light? >> we've been in conversation with lots of contacts in d.c. and they told us about the top deal is a hundred billion in assets. the reason why they have been telling us that is because of the bank panic of last march and the primary regulator of capital one has put out new guidance on regulation and asking for comment. the department of justice is asking for comment on what they want to do with bank mergers so i think they're trying to get this done by the end of the year unless president trump is

reelected this is going to be very difficult from a regulatory perspective. annmarie: is the u.s. election a potential issue? >> they do have higher standards for banks. if you go through with this you will see more bank consolidation. there are a couple of things in their if you have a lot of credit cards there will be higher capital charges. that could be driving this conversation. what's really fascinating is that we could also be driving

this conversation is on the hill for credit card issuers if you are above 100 billion you need a network that is not visa or mastercard discover was the winner. but that could be part of a pro-competition angle. that will be the push and pull this year annmarie: can we talk about the timeline we have 2, 3 days to fund the government. do they get this done or is there a higher risk of a government shutdown? >> the honest answer is i don't know. the house and senate are out this week and they come back next week. we had members of the house

leadership saying there is not going to be another cr so it's hard to see how you will get the finalization of those four appropriation bills before march 1. is it possible? or could we see a partial government shutdown trying to get something done before march 7 when the other eight bills have an impact on the government ? we are not going to have a prolonged shutdown but could we have a buildup of a crisis? that is totally possible. annmarie: what about the foreign aid bill? this is been a stalemate in congress does not show up at

this to get that over the finish line? >> speaker johnson asking for that meeting with hyden after the homicide of alexi navalny and the concern about russia and this is building up pressure but what i'm looking for is when you know you are going to get jammed. the house will at least have to have a vote on this you are looking to see what else can i get done? the house voted to overturn president bidens lng band for the next couple of years and i would normally say let's get that added or the border bill in both the problem for speaker johnson the more he seen as negotiating this the more his speakership is in doubt.

but i think ultimately this gets done with parliamentary pressure i think it is done is just a question right now of the politics playing itself out before we figure out the mechanism but by march we will have this aid package cited the law. lisa: there are three buckets in d.c. there is merger and acquisitions, the deficit and geopolitical risk. which of those three do clients ask you most about? >> it depends on the client. we have a large client group

when i am talking to a portfolio manager those geopolitical risks come in and when i'm in new york the debt and deficit conversation come in the play. there are caps on the debt and deficit but when i speak to bank investors they want to know about regulatory risk. it makes for an interesting job and lots of conversations to have in d.c.. . is probably only going to get more interesting. jonathan: looking forward to more conversations about these issues. let's talk about what's happening on the international stage. there is tension in the middle east and in ukraine but you have

a more constructive view on the endgame. where does this wind up? peter: to be quick and the middle east we are watching anything that forces us to start clamping down on oil sales. we have turned a blind eye to that. anything that forces that could be very bad for the market. when we look at russia/ukraine we see this drifting toward some kind of truce. i think it will depend, the big bargaining chip people are talking about is we held back a

lot of the russian oil reserves. i think it will be inflationary for europe. lisa: all of these geopolitical risks are inflationary because you have potential commodity risk. peter: you will have to have an immense amount of commodities to rebuild ukraine. and in china are big view is that working that shift from made by china to made in china. a year ago people looked at us as if we were insane. i think they will go after emerging markets and in southern

europe, those we points where they need those discounts. as china goes from being this manufacturing hub and we are not prepared for it. jonathan: the governments might have different ideas. pyd, latin america, italy and elsewhere. lisa: they will not be selling things cheaply to companies in europe and the u.s. which could mean inflation and questions about tears. jonathan: up next the president of guyana about his country's opportunity in the energy sector. don't miss it. ♪

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jonathan: live from new york city about 60 minutes away from the opening bell. in the bond market, two-year, 10 year and 30 year look something like this. two-year unchanged of 4.6. 10 year 4.2. the euro 1.08 positive 5.3%.

guyana is talking about the immediately development of is power resources. exxon is ramping up production. but tensions arise over a border dispute. the president of guyana joins us now. thank you for being with us. let's talk about the tension. venezuela has been building up a military presence at the border. what kind of assurances are you offering to foreign companies? pres ali: the greatest assurance we can offer is that diana is sure of its territory and

borders. venezuela participated in the settlement of those borders so there is no doubt as to where our borders are. the controversy was raised by venezuela decades after independence and that controversy has been reported to the icg. we respect the rule of law and that is why we ask venezuela to participate and be a member of this community. we are very sure of our case and our borders and investors need not worry.

their investments are in the territorial space of guiana. jonathan: i'm wondering how closely you're working with the state department? pres ali: we're working with not only the u.s. state department but with many of our national and regional partners. they have called on venezuela to respect the outcome of that process. brazil, france, canada, u.k., the u.s., is in support of guyana. our borders were acetyl in the

1899 war. annmarie: experts say the imbalance between the military of guyana and venezuela is 100 to one but are you going to be building up your own defense capabilities? pres ali: we are investing in the modernization of our military and advancement and use of technology and building up our human capacity and structure. we are working closely with their allies, with the u.s., france and u.k.. we have training exercises we are conducting together. we are working with regional security systems. it's not only what exist within the country but our work we are doing in the international community and our partners. annmarie: the u.s. has said that

this assessment of maduro says is small in nature, do you agree with that assessment? pres ali: we believe any threat on our borders has to be taken seriously. we are taking it very seriously. we are working with venezuela to ensure that this does not escalate because our primary focus is to ensure that the region remain stable. we want to ensure that we do everything to promote peace within the region. in our assessment, there is a lot of assessment, it is a

threat that we are taking seriously and are ensuring to secure the territorial space of guyana. lisa: how much urgency do you feel to monetize the oil and gas reserves in guyana before there is some kind of transition away from fossil fuels? pres ali: we have to look at transition two. we have 36% of the world's energy coming from coal. we have people living in energy poverty. the technology on transitional energy sources is not there to give us -- developing countries are having difficulties. the supply chain of the technology required for

transition is not at capacity. we are all for the transition and clean energy and the use of renewables. i want to make the point that the transition has challenges and we understand we must also develop our oil and gas resources. the time to develop is now an innovative production is now and that is why we are working aggressively on moving from discovery to operation but also moving in an aggressive way to develop gas resources of guyana. so that other sectors also become competitive and

using gas resources to build up infrastructure and resources in the country and connecting it with brazil. it will open up the opportunity to conserve linked brazil to the atlantic through guyana that will save shipping time and reduce shipping cost and advance their competitiveness. that also allows us to move the value for bauxite. we can develop an aluminum plant.

that will also help to justify building up the infrastructure. this is what we are thinking about. it's not just the expeditious monetization of the gas but how we reduce diecast and white in the economic base and bring in new opportunities for the country. lisa: is there still this timeline for exxon to approve this deal? pres ali: we're examining that right now. that is a technical assessment that is being done and we are working to move it rapidly. but also, ensuring to satisfy

the climate. annmarie: how concerned are you about inflation rising within guyana? pres ali: we are working on ensuring that the economy is not dependent on oil and gas both those resources will be used to fill out other sectors of the economy to make us more competitive. we want to position guyana as a global leader in energy security , food security because we have a competitive advantage in the production of food. we want to be the leading producer of food in the region and thirdly on climate, we want to be a leader on climate. we have the lowest deforestation rate in the world.

we already have -- all of this help with taming inflation and make sure we invest wisely. we will not go into overheating the economy or build what is beyond required to advance our country. we have strong, physical policies and the resources come from our revenue goes directly to invest in areas all over the country. the socioeconomic development of the country. these are the things that we are doing.

our inflation rate over the past three years has been very stable. jonathan: the incentives for foreign countries to develop these natural resources. this is still a high risk investment. back in 2018, the imf criticized the terms of the deal as being too favorable to exxon with the royalties being offered not being high enough. given the situation with venezuela how difficult will it be to demand higher royalties? pres ali: we have already said the agreement with exxon, it was highly stacked towards exxon and they have already changed the psa.

we have made this public. the psa is striking a balance. this is an industry that has its own difficulties raising capital for exploration. the cost is difficult and the cost of the capital for investment in the oil and gas sector is higher. which is raising the cost of operation and exploration. all of these difficulties in the industry, we have to ensure that we have a psa that strikes the balance and gives us the best returns but at the same time, does not work in a way that will drive away investment. we had a psa that was shared among all those who participated in the options and we are

continuously looking on the conditionality's and guidelines. the future psa's that exxon got will not be to the detriment of investors. jonathan: mr. president, thank you for being with us today. president ifraan ali from diana. annmarie: it would change the energy map and what they're able to produce but i am struck with his tone when it comes to maduro's troop buildup on the border. clearly, he is concerned about it. maduro is using putin's playbook

when he was bordering on ukraine and that is what is concerning here because this is so resource rich. jonathan: let's give you an update on stories elsewhere. here is your bloomberg brief. dani: china is ramping up support for his property sector. lenders will slash their five year loan primary to 3.59%. the first because since june and shows an increasing -- so far the potted administration has been reluctant to take steps against israel but frustration with netanyahu is growing. biden says he is willing to meet with mike johnson about a 95 billion aid package for you

israel. >> were making a big mistake by not responding. the way they are walking away from russia, nato. it is just shocking. i have never seen anything like this. dani: the white house is ramping to push the bill after the death of alexey navalny. that is your bloomberg brief. jonathan: up next capital one agreed to by discover for 35 billion. >> you have weaker competitive trying to get together for survival you have to look at that as a regulator. jonathan: live from new york city, this is bloomberg. ♪

jonathan: we are 42 minutes away from the opening bell. equities are down 5.3. unchanged at the 10 year at 4.27. under surveillance, capital one agreed to by discover for 35 billion. >> you have weaker competitors trying to get together for survival you have to look at that as a regulator. i don't understand why this will be a huge issue. i think they will see past that. jonathan: the deal sets the stage for the largest credit card company by volume.

pending regulator approval. joining us now to discuss additionality bassett. what is the rationale for this deal? sonali: you have a large company that could get a lot of synergy. capital one has 20 billion worth of non-interest alone. it also adds a network. capital one is in issuer and discover has a large network. reducing reliance on visa and mastercard. jonathan: dear regulator this is why this deal should close. what will be the difficulty? sonali: they have changed guidelines when it comes to bank mergers so they waited until they came out with the new proposals.

they have a certain degree of certainty that those of relapse don't exist when it comes to these new guidelines. lisa: what with the rationale be for regulators? we are looking at a premium of 20%. those shares are up 12%. what is the main obstacle when they are not that strong in terms of the players? sonali: they highlighted network capability. if you take the loan volumes you have the number three and number six company merging. but you're not talking about j.p. morgan and citigroup. you are making discover bigger. you have discover a lot smaller than visa and mastercard. they're starting to highlight that discover is lower down on

the totem pole. lisa: capital one doing a lot of business with lower income families, subprime loans. in uniting the two and there is a real question if this is a cyclical play. where banks are trying to get into credit cards or whether this is protection against the downside. sonali: right before i came here i had to look at just how different they are. capital one with one third of their customer base with micro scores at 660. they are rounding out their base here. if you are a regulator, what is that mean? you start to worry about what the consumer base looks like. capital one has been starting to entire on the luxury and

well-capitalized sector of consumer but then what happens for those being left behind? jonathan: we talked about bank of america and how strong the consumer base actually are. sonali: most americans have fica scores over 700 and banks willing to shed fica stores. if you have large credit cards merging there is a worry about what happens all the lower end of the spectrum. they are doing this at a time when many companies are tightening standards. if you go back over the last decade you have historical tiger standards then you would've thought in 2021, 22. jonathan: what's your take away from the deal activity we have seen this year? sonali: you have winners and

losers. there is a divergence between capital one and discover. discover had stocks logging because of regulatory issues. now is the time to pounce because of that divergence and the regulatory picture being unclear. jonathan: those are two stocks to watch coming up to the opening bell. mike schumacher of wells fargo. lisa: talking about increasing it beyond 5200 the people are calling for. you have to wonder what's behind this? is it the big seven, do they continue to drive this or the broadening out people are

talking about? jonathan: the dominant one, nvidia? wedded to college? lisa: i forgot it, outstanding. jonathan: up more than 40% year to date after rocketing through last year. lisa: it's the golden child that everyone hates. jonathan: the siblings hate but the parents love? you just wonder how important federal reserve policy is. if you push back on expectations after cpi and ppi which is a bad reason to push back rate cuts. lisa: the big mystery for me is where we are in terms of neutral? is 4% the new neutral?

the fed is not going to cut that much but it will allow certain equity investments to do ok. jonathan: the federal reserve minutes are coming out tomorrow. given how uncomfortable jay powell looked in that news conference. since we have heard from fed officials, they seem pretty in line with each other so i wonder what was going on in that press conference? lisa: are they saying the same words with a different meaning? i wonder if that is the measure of how they get to that level where there ready to cut? jonathan: we hear from boston tomorrow. basically, the whole committee. equity futures are slightly

lower. the opening bell is 34 minutes away. ♪

when i was your age, we never had anything like this. what? wifi? wifi that works all over the house, even the basement. the basement. so i can finally throw that party... and invite shannon barnes. dream do come true. xfinity gives you reliable wifi with wall-to-wall coverage on all your devices, even when everyone is online. maybe we'll even get married one day. i wonder what i will be doing? probably still living here with mom and dad. fast reliable speeds right where you need them. manus: good morning. that's wall-to-wall wifi on the xfinity 10g network.

do you have pre-staged nvidia nerves? these equity market to ahead of those numbers. tomorrow, let's see how we go down as we countdown to the market open. it begins right now. >> everything you need to gets to -- to get set for the start of u.s. trading, this is bloomberg: the open with jonathan ferro.