>> we can talk about all this great economic data, but at the end of the day the market is narrow. >> what we are looking for is the rally to widen out. >> there is other values within the market other than technology. >> we expect some of the other parts of the market that have lacked to take the lead. >> i would like market breadth to improve. announcer: this is "bloomberg surveillance."

with jonathan ferro, lisa abramowicz, and annmarie hordern. jonathan: let's talk about nvidia. live from new york city this morning, good morning, good morning. this is "bloomberg surveillance." nvidia up by 14%. we said yesterday 4% of the s&p 500. and 99% of the enthusiasm to buy this equity market worldwide. the sick, going through the numbers, the numbers are absolutely ridiculous. fiscal fourth-quarter, revenue more than tripled to $22.1 billion. as recently as 2020 one nvidia didn't generate that much revenue in an entire year. as for the profit, up 400 86% year-over-year in earnings-per-share. lisa: largely driven by the data center division. how do you even comprehend these numbers? we are talking astronomic growth, unseen since the time of the railroad or the advent of the internet.

and what we heard is this is just the tipping point. how do you price that kind of growth, given we don't know how far it can go? jonathan: we will ask dan ives in just a moment. morgan stanley, remarkable strength of ai. hsbc, difficult to please. lisa: to be complete the honest, when it first came out it didn't meet the highest expectation on the street. because of that the shares didn't skyrocket right away. then people looked at it and said, this is ridiculously amazing. maybe hsbc has one compatriot on the street. what i'm looking at is you are seeing a readthrough to other chip manufacturers, to other types of players. how far can this go, given that people see this benefit going across industries for the foreseeable future? jonathan: stock is uppermost 14%. if it wasn't for china this could have been even better. annmarie: there were able to try to get the entire growth out of

their market in china, how much higher would revenue be? it is now single digits when it comes to china. the ceo had this to say. wants to limit the capabilities to the chinese market, and the u.s. government would like us to be successful in china as much as possible. what he is saying is, we are not going to give you the best we can come but these downgraded versions, we are still going to ship to china. the issue becomes, when are these customers in china going to say, we don't want the downgraded chips, we want the highest processor you have available? jonathan: it is easy to sit here and get carried away with this being the only game in cap -- game in town. take a look at chinese equities. european stocks if they close right now, all-time highs. the nikkei reclaiming the 1999 big number. we have been talking about this for the last couple of days.

gdp is negative in the u.k., negative in germany, negative in japan, and we are talking about all-time highs in europe. lisa: how much longer can we continue if the u.s. is the only game in town? can we get bullish about chinese equities? there is a question also, we get the pmis out of europe, and we are talking about service sector expansion for the first time in about six months. jonathan: just. lisa: germany. can you be talking about some sort of expansion? you put this together, you are right. how long are we talking about something driven by the u.s. and filtering out? jonathan: did you see the note from marco at jp morgan yesterday? we find current market developments. is he alone? lisa: there are a lot of people who would agree with that sentiment, but i have to point to what julian emanuel said, which is formal -- fomo is going

to fomo. jonathan: fomo is still fomo inc. positive by 1.2%. in the bond market, down a basis point or two. there is that strength off the back of that data. lisa: it was surprisingly good services sector data. it was surprisingly bad manufacturing sector data. maybe everyone shrugged this off because germany is the sick dog of europe or whatever people like to call it. the fact that service sector spending can keep going, even get a boost, that currency cross, mindnumbing. you can come up with whatever narrative you want and play it through the cross and you will have your story. jonathan: coming up this hour, a lot to discuss. dan ives of wedbush. tobin marcus of wolfe research.

and sarah hewin of standard chartered as the fed weighs the risk of cutting rates too soon. we begin with our top story, nvidia is surging. fourth-quarter revenue growing by 265%. the chipmaker expecting revenue to grow to 24 billion dollars, surpassing expectations once again. dan ives saying, this is a game changing moment for the tech bowls and puts jet fuel in the tech bull market thesis. dan ives joins us now for more. promise me this. when you find me wrong on this name you have to turn up in a black suit with a black tie. but today you get to wear whatever you want. is this the only game in town right now? dan: look, the godfather of ai, jensen and nvidia. this is the earnings heard around the world. the most important earnings in years, and it shows this ai

party is just getting started. in terms of relative to what we are seeing in peak demand, and lisa talked about it, this tidal wave of spend is coming to the rest of tech. that is going to continue to fuel this tech bull market. jonathan: we can get into the broader tech universe, but let's talk about the lack of competition. how relevant is the competition? dan: look, for the next 2, 3 years you will have amd, but right now they are the only game in town. that is when you look at the godfather of ai, jensen, it is the best read on what we are seeing from the ai revolution. it goes from gp used to the rest. this is good for hyper scalars, obviously chip players, but now it is coming to the rest of software. that is why it is an important moment for the market. i get it, they are in their bear

caves in hibernation mode. i think this is a stock that could be four digits. lisa: the ceo is talking about how generative ai has reached a tipping point that has kicked off a whole new investment cycle. there is the investment coming from? are far can i go in terms of how much money some of these companies have to spend on generative ai? dan: that is the key question. the first piece of that puzzle we saw with hyper scaler players. but now we are seeing acceleration. this could last for the next two to three years, in terms of from a pace perspective, from a capex perspective. what you are seeing is a transformation, a change in i.t. budgets that are moving toward this. that is why the ones that win, from software to chips, anyone

that plays in that supply chain, outside of valuation and some black swan event, these are going to continue to go higher. i think it fuels this tech will market, -- bull market. lisa: what are they going to do with all of their money? the data center vision is up 409% from the same period earlier. where does that money go? dan: i think jensen puts that black leather jacket on and he's going to start looking at m&a. you're going to start looking at acquisitions to accelerate what nvidia is doing, flex the muscles from a capital allocation perspective. they are going to get stronger here. from microsoft to big tech. right now for big tech this is a flex the muscles moment because

of what we are seeing on generative ai. you look at the data center number, that is the key. there is nothing in those numbers that make you think this is hyper. i think it is a 1995 moment. that is what i equate this ai revolution two. annmarie: i hate to pull -- to pour cold water on this. but china, you are looking at single-digit growth. that is where they expected to be when it comes to the chinese market. what is your outlook, given they are going to be held back in this potentially huge growth market? dan: the biggest risk is china. right now they are navigating, and terms of that tug-of-war they are able to still do it with chips. but it comes down to, i don't want the b-chips, i want the a-plus. the rubber is going to meet the road, the next year, year-and-a-half. with restrictions, this will start to become an issue. for now, they have figured out

that type or of -- that tight rope. and that is music to the years. if that happens to this overall tech market, i mean, it is a get out the popcorn moment. annmarie: what do you see in terms of competition in china at the moment? dan: look, there is really no competition, because they are the only game in town in terms of that premium gpu chip. obviously there are ones that will be here 18, 24 months from now. everyone is trying to accelerate that, but jensen continues to sit there. and that is why you look at nvidia it is the best and only read for foundational gpu and ai demand. we saw the first piece on earnings with the hyper scaler's. i think this is one, at least for the next 1218 months, this is an accelerating story, not one where it ekes out. jonathan: the market changes

almost unbelievable. not just for them, but meta too. meta added to its market cap, a record edition -- addition. we might beat that with nvidia. why is this 1995 and not 1999? dan: i think that's the question, right? it's because of the numbers. in other words, the monetization is just starting. when you now start to look at these numbers, that tidal wave is coming to software. it is coming to the rest of the chip sector. it is coming to the supply chain. the growth we are going to see from tech, from a lot of the other 493 stocks over the next six to nine months, like i said, this is the biggest tech transformation in 30 years. and you can argue even longer in terms of the start of the internet. and it is being led by nvidia,

being led by redmond, satya nadella. jonathan: unreal. dan ives of wedbush. that name in the premarket is up by more than 13%. unbelievable to see this play out. lisa: a two-year bull market. jonathan: had a decade and 12 months on that stock. lisa: here the question. what does exponential growth look like after exponential growth? given the fact that at some point you have to think there are going to be other competitors. jonathan: at the moment for me it is the ultimate employment insurance. if ai is going to be as terrific as everyone think it is going to be and we are going to lose our jobs because of that, you want to be in that name. lisa: that is the downside risk. i wonder what the barrier to entry really is. is it the hot thing now but could there be a gpq is going to

revolutionize things? i'm going to get all sorts of mail. you don't understand anything. you are right. jonathan: the stock is up by more than 13%. plenty more coverage this morning. let's get you an update on stories elsewhere this day. sonali: japanese stocks are hitting a milestone. the nikkei extending at stellar rally to a record high. closing now above a peak last achieved in december 1989. technology shares and the chip produces leading the gains, and global funds are piling back into a market that fell out of favor for faster growing markets like china. japan now on a path to sustainable growth as it escapes deflation. a woman build is one of the most likely candidates to become them -- the next cfo of goldman sachs is leaving the firm. she moved into her latest role running the financing unit after being passed over for the cfo role in 2021. no woman has ever been appointed

to the role of chair, ceo, president, or cfo in the company's history. rivian shares are lower in premarket trading after delivering a mixed earnings report and disappointing forecast. the ev maker also announcing plans to cut 10% of its workforce and aggressive cost-cutting measures now taken for the third year in a row. rivian, struggling with stagnant demand and economic turbulence, with the ceo siding historically-high interest rates as a pain point. that is your bloomberg brief. jonathan: thank you. just unbelievable, some of the tension, the difficulties taking place in the ev space at the moment. up next, nvidia sparking a global stock market rally. >> what we are really looking for is the rally to widen out as what i would call, basically, the cyclical overhang starts to left. jonathan: that is coming up

next. this is bloomberg. ♪ ♪ as the head of hr, i help lead a successful home security firm. our teams work hard to secure our customers' most valuable assets. and while they do that, i work hard to secure ours... ...our people. that's why we chose principal to provide the benefits and retirement plan that show our people just how much we appreciate them. benefits help us keep top talent. —hey mom. benefits help us grow. because we know how important security is to all. ♪♪

was also the first time you heard of a town named dinosaur, colorado. we just got an order from dinosaur, colorado. start an easy to build, powerful website for free with a partner that always puts you first. start for free at godaddy.com jonathan: stocks doing nicely here on the s&p 500, positive by 1.3%. nvidia rallying in the premarket by something like 13%. yields are lower by a single basis point. under surveillance this morning, nvidia sparking a global stock market rally. >> really there is certain themes playing out, but what we are really looking for is the rally to widen out as what i would call, basically, the cyclical overhang starts to lift. jonathan: peers the latest.

global stocks rallying after nvidia's blowout earnings report. the nikkei reclaiming its 1989 high. ben gutteridge of invesco remaining positive on equities, seeing a continuing of disinflation, incrementally dovish policy, and resilient growth. in got a ridge joins us now. let's go into that, why the market is going to broaden out way from these tech names anytime soon. ben: it may not. i will do my best to sort of contain my enthusiasm and remained measured. what a fabulous day for markets. those things you mentioned about disinflation and easier policy and resilient growth, i mean, doesn't really sort of peak the interest at the moment. life is about earnings. what a sensational set of results from nvidia. there is great momentum there, and i think the equity markets

sort of really nicely set up from here. lisa: i try to contain my enthusiasm, but oh my god so great. which is how the market feels right now. julian at evercore has been talking about this to be -- has been talking about this be a think let her kind of moment. saying that fomo operates on its own timetable and the momentum in's when it ends, which is often without morning. do you agree with that characterization? that this is a moment of fomo that is going to run out? ben: of course it could. this is anecdotal, and i'm speaking with managers, and it is not obvious that lots of fund managers are overweight this stock. clearly the valuation is at a headline level that has been nerve-racking for more disciplined fund managers, but

they are missing out. that is a huge pain trade. i think the fomo trade is as ill disciplined as it sounds. i think this relates to that. i think those suffering that pain could join this and accentuate this rally. lisa: which raises this question. it doesn't necessarily have to happen. you can just keep banking on nvidia and defined. how much do you have to bank on the headline, s&p, market-weighted index, and forget about the people who are saying we are entering some new cycle that is going to be beneficiary to all of the other stocks? ben: you have to maintain discipline in your investment strategies. as difficult as it is. if you are participating it is easy to sit and let this run. to a degree it depends on where you're coming from and do not

wish to be, sort of to bloat trumpets too much, but we have talked about our enthusiasm for u.s. stocks. our starting position is one where we can actually take some of these profits and maneuver them elsewhere. be it into small caps, into u.k. equities, even a bit in emerging markets. the scale of profit-taking should not displace u.s. equities and u.s. growth equities as being the main stay in portfolios. jonathan: you cannot just drop the u.k. in there and expect us not to notice. what is behind that? gdp is negative. is that a call about the global -- the global growth story or the inflation risk that might be around the corner? ben: how kind of you to give the u.k. some air time on this day of nvidia. there are some very downbeat expectations about the u.k. economy. we were in technical recession at the end of last year. i think the economy has proven more resilient than anticipated. to be some fiscal support coming

through. i know valuations have been long talked about, and an unrealized tailwind for u.k. equities. and there is a geopolitical hedge there. shocks, you know, u.k. -- the u.k. stock market should benefit from that. jonathan: that valuation gap has been a valuation trap for quite a while. i want to throw in japan and talk about the global market. to see japan and the nikkei reclaiming that -- reclaim that is phenomenal. we caught up with deutsche bank yesterday, who said, look to the fx market. the dollar-yen is around 1.50. can you get to 1.60? can we drop in the other direction? that is the ultimate risk. what do you say back to that. -- that? ben: i think i'm cautious on

japanese equities as it relates to proximity to the china growth story. not totally convinced about the speed of corporate governance change. but, you know, japanese equities , if you are buying into them i think given we have all of this enthusiasm for equities and u.s. equities in particular, portfolios are leaning into that risk on position, what is a good hedge against that? probably the yen. the yen might get cheaper, but for diversification it is probably better off eating long yen. i would say japanese equities give you some of that. lisa: are you bearish on anything? ben: [laughter] well, i think cash could be an unproductive asset for you this year. that is a good point.

the 60/40 that got so trashed in 20 22, if you have disinflation and resilient growth, that is a nice backdrop. it is hard to get -- you know, i'm not sort of permanent-bull. jonathan: it is great to catch up. ben gutteridge of invesco. that was such a nonanswer. lisa: theoretically cash cannot be a great thing. but you know, it's not terrible either. the idea that people are coming out there trying to contain their enthusiasm gives you a sense of what we are in the cycle right now. jonathan: the stock market is not the economy. but to see europe at all-time highs off of the weakness we have seen there, to see china on an eight-day winning streak, i get that. they have effectively banned the selling in certain parts of the market. but japan is struggling with

growth. lisa: what binky said yesterday is fascinating. a lot of the markets are tied to the united states. inky thinks they are also leveraged to some areas which could be problematic, given that they -- there is slowing down. jonathan: can i make a public service announcement? if you are about to leave the house and you are connected to the wi-fi, just check you have service on your cell phone stateside, because many people thought they had it and then found out very quickly that they didn't. i think there are some problems out there. lisa: is this personal? jonathan: no, i think it is personal to at&t specifically. look at -- look out for that this money. up next, senator hawley agreeing with senator warren. that conversation up next. ♪

jonathan: this is what the stock market looks like when the third-biggest weighting is up by something like 13%. the nasdaq 100 is up by 2%. this morning we are doing far better than just squeezing out a day of gains. if you look at the bond market, haven't mentioned the federal reserve at all in the first 30 minutes of this program. the 2-year is at 4.6687, which

is 40 basis points higher than when we closed the day the fed last met. andrew hallman or said those were stale. i think a lot of people would agree with him. lisa: there were some hawkish signals under the hood that people kind of hooked into that really emphasized the risk of cutting too soon rather than too late. maybe people are saying this is hawkish. jonathan: do you want to talk about fx? this is brammo's favorite currency pair. fx is a relative game. what we are seeing in america is relative economic strength compared to weakness in europe. weakness in japan. weakness in china. the euro is at 1.085 zero this morning. relatively speaking we skipped that low bar. lisa: this is the reason this is frustrating. we can come up with narratives

that make sense. the u.s.'s growing much more quickly than your. there is no question about whether the -- whether europe is going to have to cut rates before the u.s. so trying to put a narrow -- a narrative to each incremental and -- incremental move is feeling tired to me. jonathan: under surveillance this morning, and video beats massive expectations. the stock surging and sparking a global stock rally. the chipmaker, surpassing estimates on its fourth-quarter revenue. the nvidia ceo saying, consent -- accelerated computing and generative ai have hit a tipping point. demand is surging worldwide. dan ives calling him the godfather of a i minutes ago. lisa: what is he going to do with that money? he's going to put on the leather jacket and by someone. who is he going to buy, and will he be able to? here is this question of, what

did they do with that cash and how did they remain the dominant player? jonathan: jetblue and spirit, no. albertsons and kroger, no. apparently nvidia is going to make a big deal? annmarie: i don't think so. not in this market, given this ftc and doj. also last night, another disclosure report from nvidia. it is not just the u.s., france, china looking into them. u.k. regulators are also going to be looking into nvidia. jonathan: amazing to see this rally. dreadful to see this playing out over at going. the head of boeing's 737 max program as out of a job after the mid air blowout earlier this year. clark is stepping down after nearly 18 years at the company. the move is part of a shakeup amid scrutiny. executives will also face questions from the faa chief

mifid would occur -- mike whitaker in washington. lisa, is this going to be enough to keep some of the wolves at bay around this company at the moment? lisa: no. right now we haven't gotten answers. we haven't found out what the real problem is and how they are going to remedy it. it makes me a little sad after watching planes take off this weekend. about the magic of an era that is bygone, and what has gone wrong with these planes that have become mainstays of vacation and business. not to get poetic. jonathan: you have to talk about how good the food service was 30 years ago. used to be able to smoke. annmarie: which is scary. jonathan: you know what really scares me, seeing the ashtray there. that is when you know you are on an old plane. lisa: i was looking at the uniforms, and they were designed by versace. it is a bygone era. in the 1950's flights were $450

then. inc. about transatlantic flights and what they were in real-time. it is a trade-off, but hopefully not a trade-off with things getting blown up. jonathan: republican senator josh hawley joining democratic colleague elizabeth warren, opposing capital one's deal to buy discover. it would create the largest u.s. credit card company by volume. senator hawley saying, seems like the credit card companies are finding another way to screw the american people. this merger should be blocked and congress ought to cap credit card rates pronto. hawley saying that credit card rates should be capped at 18%. jetblue and spirit, washington says no. albertsons and credit, washington says no. capital one and discover, washington says no. >> from a political perspective, the wings of the two parties these folks are speaking for, i

do think there is a general allergy to any kind of concentration. it is not surprising to see those folks come out against the deal. it is a narrow swath, but a politically influential set. warren's perspective is aligned with the doj and ftc. the sort of outside thing takes that come from that antitrust movement have also been broadly skeptical of this deal. the pressure to scrutinize it is intense. certainly to draw out the review. how it goes in courts is a different question. the concentration on the issuance side of things and the pro-competitive impact of strengthening discover cut opposite ways on this. i tend to think the latter is going to be more compelling when it goes to litigation, if it does.

there are multiple different lenses through which you can look at this. annmarie: when you look at this pressure from a leading democratic voice, and as well a republican voice, you have to think that this will weigh on this current doj and ftc. would you say, already aligned with a lot of messages elizabeth warren has already sent out? tobin: the hawley thing is not going to make a difference. i have a hard time believing jonathan kanter is going to wake up and see this and do anything differently. the warren thing is relevant in terms of shedding light on a pre-existing perspective rather than as a source of pressure on the antitrust enforcers. i don't think they are taking marching orders in real time from warren, but to share her analytical perspective on this. it is a useful incremental signal about what they are going to do, because they have such shared dna. more so than they are directly responsible to the political imperatives.

annmarie: there is a potential government shutdown next week, so i want to get your take on how you see this playing out. do you think there is going to be a shutdown, given they have two to three days to hammer out appropriation bills to make sure the government is funded? tobin: it is certainly a possibility. the likelihood they get a bipartisan deal in place in advance of the march 1 deadline seems low to me. they are theoretically making progress, but progress is always slower when they are negotiating when congress is on recess. by all accounts there are sticking points remaining. question is, are we going to get a continuing resolution? the two possibilities are we get a cr, or i would not be surprised to see a short-term shutdown on march 1. in this period before march 1 and march 8 deadlines. i don't think there is much willingness to let defense appropriations lapse.

speaker johnson has shown he really does not want to shut down. he promised he was never going to do another short-term cr, and he ended up doing so. so, push is coming to shove right now on whether or not we get a cr or lapse in funding. i think he has made it clear that his judgment is does not make sense to plow into a shutdown nobody wants. my assumption is we will get another cr in place despite the moaning and wailing we get from the right ring -- right wing on that. johnson's decision-making has been hard to protect. lisa: you said nobody wants a shutdown. is that true? does the former president want to shut down? tobin: yeah, that is fair, i guess. neither party's congressional leadership once a shutdown. there are some voices. i don't think that even trumps sees clear political advantage from this. the policy writers at stake are not really the kinds of things,

the kinds of things that would be triggers for a shutdown are not near and dear to trump's heart. he weighed in on the immigration and ukraine deal. that is core to the case he wants to make to voters this year. i don't think anything in the current appropriations negotiations have that character. so at some level he probably has a generic interest in chaos and dysfunction hunter biden, i don't think this is something he is most motivating house republicans on. lisa: it seems like for the large point of view we are moving on from the alexei navalny issues and the fact that he was killed, or died by unspecified causes in a penal colony in russia. there is a question about whether this was actually going to cause people to have more urgency to pass aid to ukraine. have you seen that borne out in any way ahead of the announced potential sanctions from president biden tomorrow? tobin: i don't think the navalny developments change the

congressional calculations. even on the sanctions front. what i have heard is that this is largely a package that has been under development for the second anniversary of the war that has been rebranded. it is not as if this is the first conduct from russia we have punished. we have already sanctioned everything we think it makes sense to sanction, so this is not going to be -- i don't want to say symbolic, but it is not going to be an earth shattering set of sanctions. i continue to think that the wafer aid for ukraine does or does not get done is based on backroom negotiations between johnson and the house and senate , democratic republican leadership -- democratic leadership. i think his political incentives to not allow a vote on ukraine eight are strong, he has done the "responsible thing" in surprising situations before. with the surveillance extension being one. there was an obvious path for

him to have as a movement conservative, to take jim jordan's bill and put it on the floor. that is not what he did. he went along with what the washington security establishment would have hoped for from him. i think it is possible he says, political cost is going to be real for me from the conservative side but i'm going to allow this to be attached to the funding bills because it is the right thing to do in the face of pressure from the senate and white house. again, i think he is going day by day, so it is hard to have a terrible degree of confidence about what johnson is going to do. jonathan: we have to go. tobin marcus of wolfe research on the latest in washington and the fact no one seems to like companies buying other companies. i need to check in on the house of nvidia. the stock is up 14.5% in the premarket. lisa: which means it is going to be something like two hundred $40 billion of market cap added in one day. jonathan: which is a new record. lisa: how do you price in

astronomic growth that is not ending? i have no idea. jonathan: what multiple do you put on those numbers? lisa: given the fact that there is 400-plus percent growth in some of their revenue streams, how do you by that? annmarie: i checked the analyst recommendations last night to see, is anyone saying sell the stock checkup last night one analyst. this morning that individual has changed to hold. how do you see results like that and forecast like that and see cap -- and say you should salvage? jonathan: i think you called a career risk. this stock is up by more than 14%. this get you an update on stories elsewhere this morning. he was your bloomberg brief with sonali basak. sonali: nvidia shares up after the ai darling delivered another eye-popping earnings report. roles most valuable chipmaker says revenue will come in at a

better-than-expected $24 billion. the ceo says demand for nvidia's products will continue to outstrip supply for the rest of the year. nvidia's market cap has increased by more than $400 billion share, bringing its valuation to $1.7 trillion. sadie's shares trading higher. the automaker's forecast offset by the announcement of a $3.2 billion share buyback program. the ceo warning that its electric vehicles will remain more expensive for years to come as it braces for cooling demand for cars with the plug. apple is rolling out a free iphone app to bring scores to sports fans. it is available for download in the united states, u.k., and canada. it will include stats from the major leagues. apple says it plans to add more leagues over time. that is your bloomberg brief. jonathan: thank you. i struggle to believe that is a real story.

they are finally caught up and they are offering sports scores on a mobile phone. i don't get it. lisa: they have been so behind on very specific things. does this mean they are going to tiptoe into it suddenly, do sports bundling? jonathan: i have got not much to say about that at all. up next, the fed weighing the risk of cutting too soon. >> since that meeting we in the fed have gotten the cpi inflation data, which came in very hot. again, bolsters that employment report. jonathan: that is next on the program. live from new york, this is bloomberg. ♪

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cool 200 billion dollars market cap move on the open on a single name, nvidia. that name is up by more than 14% in the premarket. in the equity market more broadly, up by 1.36% on the s&p. the nasdaq absolutely flying. under surveillance this morning, the fed weighing the risk of cutting too soon. richard: since that meeting we in the fed have got the cpi inflation data, which came in very hot. and again, bolsters that employment report. as is often the case, these are stale. but the bottom line is, a touch more hawkish than perhaps we got out of the chair's press conference in january. jonathan: here's the latest. minutes showing members were united in holding rates.

we will get another peek into the fed's thinking today. sarah hewin of standard chartered joins us now. does that sound like an fomc set to cut anytime soon? sarah: i think we are looking at the earliest that the next quarter. her own view is jim. i think markets are broadly in line with that. of course, we have to see what happens with the upcoming inflation data. the upcoming employment data. we have a sense that the next core pce reading is going to be strong after three months of pretty subdued inflation reports on the pce front. of course, the all-important february employment report. does it show january just to have been a surge in new highs at the start of the new year? does it show january 2 have been a boost in wage earnings growth?

again, a new year phenomenon, or something likely to persist in the coming months? lisa: i have been kind of nasty. i have been a little bit mean about the euro-dollar cross and how it is not very interesting, because it is the same story we no one both sides, and it isn't changing, and people emphasize different things each day to come up with incremental moves. am i wrong or is this basically how it feels to you too? sarah: i think so far it has done, but what is interesting about euro-dollar is we have had a lot of very positive news on the u.s. front. it hasn't done a huge amount to help the dollar recently. we have had some very negative sentiment around the euro area, and yet today's pmi's suggested is not all one way for the euro area. there is positivity there. so it does feel as if there is potential for euro to do better over the coming weeks and months as we get, perhaps, a

realignment of better expectations, or at least not such bad expectations on the euro area front. and, potentially, fading enthusiasm on the u.s. front. lisa: do we get the sense that the ai boom is isolated to the united states, where the benefits are trickling elsewhere that people haven't realized yet, and that that story has legs beyond nvidia? sarah: that story definitely has legs, but it is very much a structural story. i think it is difficult for markets to incorporate that into the day-to-day, what does it mean for, you know, activity data in europe, what does it mean for policy in europe? so, it is a fundamentally important aspect of economic activity and growth over the coming years. but in terms of this day-to-day market, there seems to be more of an influence on the u.s. and elsewhere. annmarie: i look at germany this

morning, manufacturing downturn deepened in february. you have mercedes-benz buying back shares. how does the ecb look at all of this ahead of the rate decision? sarah: manufacturing is important, and clearly it is very important for the german economy. but overall for the euro area i expect the ecb is looking more closely at what is happening to services, what is happening to activity in the services sector, what does that mean for employment, which is still close to full employment, and how does that then feedthrough into wages? we know they are waiting for further evidence that wage growth is decelerating. we have some indications of that already in the fourth quarter. but head of the meeting in april and in june, they will want to see further clear evidence that there is going to be no upward pressure from wage growth feeding through to inflation,

and a sort of disrupting that steady ground -- steady downtrend we see toward the 2% target. jonathan: could you explain how important the upcoming wage negotiations will be in certain countries, including germany, knowing into the middle of this year? sarah: yeah, super important, in terms of what information that gives to policymakers. the wage data we have here in europe, in the euro area in particular is not so timely as we get in the u.s. therefore it is very much a matter of what the current wage rounds show. you know, how do individuals feel about the prospects for inflation? there is some slightly worrying uptrends in inflation expectations in the euro area, policy makers will want to be clear that wage growth is not echoing that. you know, those expectations. jonathan: the fed is often a threshold to reduce interest rates.

basically chairman powell said at the end of january, we just need more data -- more good data. and maybe not even as good. what has the ecb said about what the threshold is to reduce interest rates? sarah: well, it is inflation, and inflation on the medium-term horizon. if we want to be technical about it, it is clear that for the ecb the softness in economic activity is not a reason for cutting interest rates. it could be a factor behind a future slowdown in the employment story, and that in turn could dampen wage growth. but it is all about inflation and, what are the drivers of inflation from the ecb's point of view. and is -- and it is these domestic drivers. we are seeing low goods disinflation on the food front. services inflation is still too high. it is 4%, and that is not

consistent with getting overall inflation down to 2%. jonathan: sarah hewin of standard chartered. the difference between the ecb and federal reserve. some may argue the federal reserve has been clearer about the threshold to reduce interest rates. the federal reserve in their minutes, i have to say, you can call them stale. what it speaks to overall, this federal reserve is not in a rush to reduce interest rates anytime soon. lisa: this line in particular caught people's attention. some noted the progress toward price stability could stall, particularly if aggregate demand strengthened her progress in improving supply chains could falter. this is fear of an upside risk to inflation that was not present in the previous press conference. jonathan: higher risk, cutting too soon or waiting too long? lisa: now it is cutting too soon. that is the subtle shift that has caused a 60-basis increase in 10-year yields since the end of december. jonathan: one data point doesn't matter, but that one data point

with cpi, you can make it two with ppi. lisa: which is why people are leaning into this idea that they have more ability to be patient. we are pricing in a 30% chance of ma rate cut. this is how far people are pushing back. we did see td securities ratchet back their expectations or cuts this year to only five. this is shifting people's understanding of what the tail risks are. jonathan: marco of jp morgan, the 25% stockmarket rally since october was predicated on a repricing of the fed from cutting only twice in 2024 to cutting something like seven times, based on january pricing. while most of those incremental cuts are priced out, the stock market did not correct at all. that remains a mystery for people like marco. lisa: and then you get nvidia, and mystery no more. as ben gutteridge said, basically it is all about the earnings. jonathan: nvidia right now by 14%.

coming up, luke kawa of ubs, stephane bancel, the ceo of moderna, and kathy jones at charles schwab. the second hour of "bloomberg surveillance." up next. ♪

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>> we are not sure when the fed goes the first time. for most of the viewers it simply does not matter. >> the fed is steady as she goes in creating a lot of volatility. >> inflation is stickier than folks may have thought. >> inflation is part and parcel of going through what we are going through. >> a lot of the inflation data

we sell recently is seasonal and will reverse and the next couple of months. >> this is bloomberg surveillance. jonathan: let's talk about the s&p. live from new york city this morning, good morning. eckley futures positive on the s&p 500. nvidia higher by 14%, we talked about it yesterday. here it is lighting up this market. lisa: you noted this was more than the one-day record gain we saw in meda, a greater than what disney added to its market valuation. jonathan: three weeks ago. lisa: how do you frame out the seismic shift in technology that seems to be adapted at a record pace. jonathan: bloomberg intelligence validates the report, the

outlook dan ives, again change or said it was 1995. why isn't it 1999 when you see moves like the one we saw at the start of the month this morning. lisa: their revenues, their profits gained year-over-year. that's different than 1999 when someone put up a shell company and raise $1 billion. this is the difference when you have companies where people cannot get enough of their actual products that seem to be delivering something people want. jonathan: revenue more than tripled. it's amazing, just incredible. it could have been so much better if we did not have those problems in china. >> this is what bloomberg intelligence took out of the report, the affected revenue halved in the fourth quarter. 8.8 percent in china specifically so much bigger could profit and revenue have

been if they were able to go after the biggest market in semiconductors. being held back by export controls. >> i need to do a deep dive on the actual construction of these things. i want to see with the barrier to entry is and when you have technology moving so quickly it's unclear what the next iteration will look like. that's a big risk is suddenly these become obsolete. we talked about the railroads, the car at the time when it was a new product. is this transformative technology seeing only a two-year day in the sun or willoughby five years or 15. jonathan: we need to deemphasize that given what's taken place driving these massive gains in this equity market not just state but arguably worldwide. the 25% stock market rally since october was predicated on a repricing of the fed.

while most of those cuts are priced out, the stock market did not correct at all. does this explain why they are struggling with this market? lisa: there are other names as well. and then if you think health care companies will adapt to certain generative ai types of productivity gains they can benefit and see may be outsized regardless of fed policy. and it's why a lot of people size up when you talk about fed policy. jonathan: tons of fed speakers, for those of you still interested in what the fed has to say because at the moment there does not seem to be much interest at all. nvidia is up one .3% on the s&p 500. bond yields look like this on the 10 year down a most one basis point.

4.3089. hope, first horizon bank cfo and challenges facing the banks. of transition, we begin with our top story grade it is nvidia flying in premarket as they show no sign of slowing. the outlook blowing past estimates and driving this much higher. the company ceo saying accelerated computing and generative ai have hit the tipping point. demand is surging worldwide. luke joins us next. overweight global equities, congratulations you've turned to neutral. what are you thinking now? >> our view has been that a lot of the juice has been squeezed in terms of what we got in the three months ahead of going neutral there is effectively 97 percentile movement, the only

move we've gotten historically in the past 30 years when we were emerging from a recession or during the heyday of the.com boom. so the parallels do run there. the differences in fundamentals to that point of view. this is not really a bearish call on the economy. it's not even a bearish call on the stock market. it's about saying after this big run we think the risk reward is a lot more neutral in terms of the positioning in particular that we track. those inspired us and kept us in the market even when they are undergoing some wobbles. last year in q3 to q4. those now turn a lot suggesting investors are more engaged, there's a lot more susceptibility and vulnerability to any negative shock whereas the right tail is a function of the much more selective part of the market and we can get

exposure to that in other ways. lisa: there is this issue with valuation the typically in the past when you have this evaluation gain you have a less than 1% increase in the s&p at best in the following year. has history been interrupted by generative ai and transformative technology that seems to have endless demand. >> that is part of the thesis for being underweight at this juncture. it's knowing that if we still have a positive view on the macroeconomy, if we still think and if anything we think the left tail for the economy has come in over the past two or three months and not recession risk increasing at all. if we are still good to be involved in a way the economy is growing, do we really think. you said fed policy doesn't matter much, does 1.5 versus 2.5 really matter that much in a world where some of these

companies are growing earnings that fast. i would argue no it doesn't. that is something in which it is a little different this time. >> it matters for the smaller companies that have been struggling for those that have caught up with the nvidia's of the world. how do you bet on a broadening out without a view on the fed, instrumental there in terms of how many rate cuts they do is directly correlated to the strength with some of these companies. >> i certainly think the biggest bank inquiries we had of the fed have it were names that effectively needed the cycle to extend and the fed was viewed as effectively raising the risk of the cycle not being able to extend because of the monetary tightening. what happens is growth continues to stay strong even as the fed pushes back, we are talking rate cuts that have a bit of a

broadening out. we've largely closed in terms of that sense. on the one hand you do have some supportive signs from global pmi starting to pick up. that's probably more of a measure coming down and has more inventory rebuilding than a genuine thrust to growth. on the other hand you do have the pushing back of expectations, we -- earnings growth is becoming more concentrated braided we know even its rich valuations it isn't going to be earnings growth drives the market, but the evaluation does affect that forward risk reward composition which is how we end up at this neutral position. >> you are looking for faith in the soft landing to be slightly shaken braided luke: i think it will be more slightly shaken not in terms of the downside risk to the economy but more of what we've seen on the inflation front recently so we are kind of

dividing into different economic scenarios where yield stocks, etc. for us, the economy and the rates market has more and more priced a persistent inflation environment. if you try to decompose the fed inflation forecast, from the 3.2 to 2.4 at the end of this year, what does that sequentially look like in our view it looks like almost what we've done so far it implies three-month annualized picking up closer to 3%, rising closer to 2.5% in the months to come. a fed that's looking for greater confidence even as these readings are probably very much in line with their internal forecast. i think you have to look around and say how is fed -- the fed getting greater confidence. we six-month annualized core

pce. that is the kind of environment that leads to you needed the narrowness that has supported the market in recent times to continue to be very constructive. that is a risk reward path. >> how much weight are you putting on the january data for 2024? luke: not too much pride the january effect does matter insofar as its influencing expectations. the forecast we track saying this is a risk of leading this into february grade i think right now it's reset the clock on the degree of confidence the fed needs and somewhat raise the bar that's required. does it change our view fundamentally? not very much. does it change the balance of risks to risk assets, a little bit. jonathan: your foreign-exchange

call just in case lisa reaches over and punches you. luke: we think the dollar is a good place to be especially relative to g10 and that is an assessment of the changing relative risks. persistent inflation rates has become more and more central. it is the way to protect against that environment in which stocks and bonds are selling off and we think in that environment the dollar is the only place where you get function. luke: i would never be pungent -- lisa: i would never be punching. jonathan: just during the commercial breaks when no one is watching. i promise we are ok. nvidia in the premarket, let's get you an update on the stories this morning. sonali: president biden not a campaigning fundraising sweep through the west coast and

sharpening his rhetoric against russia and republicans. at an event he called vladimir putin a crazy s ob and laid into donald trump for comparing his legal battles to the death of russian opposition leader alexei navalny. biden's california tour has included fundraisers that would add $130 million to his campaign coffers. the head of the boeing 737 max unit has been ousted. ed parks is stepping down after nearly 18 years of service. it is the first change since the door blowout and the boeing ceo is expected to meet with faa officials in washington as part of the ongoing investigation. mobile users in the united states reported increasing trouble connecting this morning according to the service tracking website. at&t, verizon and t-mobile were among the carriers affected. that's your bloomberg brief.

jonathan: i was one of those complaints i'm sure. bank regulators and russia. >> if there's heightened scrutiny with this segment they are coming in. >> that conversation is coming up next. good morning. ♪

jonathan: stocks on the s&p 500 firmer here. nvidia check, many of them this morning. the stock is off session highs. treasury yields shaking up as follows. the tenure down about a basis

point. under surveillance this morning bank regulators under pressure. >> regulator has to do their job and understand what's going on. there's higher concern with the segment. they are spending more time looking at that. versus what would've happened if there was more concern on the other side. >> the regional bank index is down a 10% this year. laying -- weighing on regulators and -- there isn't a lot the first horizon hasn't seen before. the bank is about to celebrate its 160 year anniversary. the cfo joins us now for more. great to see you. >> pulled this quote from your website. serving through civil war to world wars, yellow fever, financial panics, the great depression, the great recession. >> always worried to make it 160

years you have to live through every economic environment and be prepared to look at whatever is coming at us. we look at how do we underwrite through a cycle and this is one of the ones we do continually look at. >> is selling assets slowing origination? i need to be specific because your stock is held up pretty well today. >> we have not. we want a client first relationship model and so these are clients of ours. we don't think of them as portfolios we would sell. we are lucky to have top-tier capital so we've been able to continue to lend to our existing clients and pick up market share from competitors who had to scale down their balance sheet coming out of some of the markets we were in as well as seeing our verticals get out of some of the products we love like mortgage warehousing.

lisa: just to underscore that have you been expanding those books in response to distress elsewhere? hope: we have been trying. the pipeline has come down in the last few quarters. 500 basis points of increase has really stressed the sector so we look at the loans and less that can hurt us. we look at how will it perform through the environment even at 500 basis points we could see 100 to 200. i don't think that's likely. so it's a lot harder right now in this environment to originate loans we think we'll make it through the cycle. >> we talk about where the growth potential for some smaller banks particularly in the profitability sector. i was speaking offline singh where his growth. >> for investors right now,

growth in banks has been tainted with the silicon valley signature failure. thanks grew really quickly. as we talk to investors we are doing conference -- conferences you see a lot of banks as john mentioned earlier selling off portfolio shutting down their product lines and they want to ensure the banking system is strong. a 550 basis point fed funds rate is a little bit risky so as we are looking for a number still hoping out there meeting our clients needs for market share it is harder, and investors know that. they know that there's probably some risk to that. you guys have been talking about it more than i have. how do you have a lot of low growth now not knowing what that interest rate environment is. jonathan: is this going to be

the year of the regulator or the year of mende? hope: i wish i knew. i don't think there's many banks more surprised to see a big deal more than first horizon. in may of this past year we were a deal that was terminated after 14.5 months of working with the regulators going through the merger application process the same week first republic failed we were told we would not get approved of our deal happens. this is the first big deal since the first horizon was terminated. we will sit on the sidelines for this one, but excited to see what happens. there's two things were looking on the banking industry which is how quickly this will take. we used to see these go through in about six to nine months and the two before us but did get approved took 13 months. that's a long time for an organization to be looking at the timeline. how easy is it to get a merger

approved in this regulatory environment. this is a big one so we are anxiously watching. annmarie: what they have at this capital one discovery deal is some of the calls from congress saying they should block this. she's also saying the same about this. where does that leave the idea of m&a in the banking environment. do you think in this environment , why would capital one get done? hope: i hope they can get it done but we are saying the last deal that went through declined. they are not publicly saying why they wouldn't let td bank by first horizon bank but there were some concerns. i think the bigger issue for us is the scale matters. the cost of technology to run systems today that clients expect and the cost to preventing fraud is astronomical and is increasing quarter after quarter. regional banks increased their fraud loss.

with scale you have the ability to better handle client needs and i think that's one of the big ones that discover and capital one have been talking about. how do you compete in the market without that scale. lisa: if regulators sign off on the capital one deal are you looking to be an acquirer or acquired? are there talks going on currently ahead of that potential. hope: for us, no. we are celebrating our 170th anniversary, our company is really excited about our franchise we are continuing to build our momentum were some southeast regional bank there's nowhere else to be. we have the top market growth share and we look at population growth, economic growth. we don't have any desire to do one in the near term. longer term as we see, and day open up looking at what is

opportunistic for us. the bigger things that $100 million line for the capitol rules. we have to sit back and say what is this point to get from that and what will that cost us with our next acquisition. >> what is the sweet spot in terms of size, in terms of the types of businesses you would be in. hope: jp morgan is the only one that has enough size. if you are in under $200 billion bank you want to be 500. i don't think jamie dimon -- scale just matters. the game of banking is more and more expensive coming in and more regulation impacting our ability for money. whether it's the interchange charges, the cap on client overdraft fees. expenses continue to go up and so scale is one way we can

improve shareholder value by kneeing -- being able to spread those costs across the client base. annmarie: do you think a change in the white house would change mute mute -- mood music in washington? >> we spent a lot of time talking about that with the agencies and a lot of the policy groups. we are not hearing a lot out of this campaign trail about how they will think of mergers going forward. it was a big one when trump won the first time. we are not hearing that this time so we really don't have a lot of indication just yet as to whether we will see any change with a possible trump or haley campaign. jonathan: that's the big frustration right now is there's this feeling that lingers from the last term that president trump would be business friendly. then you see things from senator hawley overnight a republican.

lisa: this is what really frustrates me, you are not hearing about it. you are hearing questions about different things which just leaves business executives, investors, rank-and-file americans in the lurch trying to understand what any of this would mean. >> great to have you with us. hope of first horizon. beating estimates as the company takes vaccine market share print we catch up with the ceo who joins us next. equity markets on the s&p 500. nvidia is flying, 13%. from new york this is bloomberg. ♪ the first time you made a sale online with godaddy was also the first time you heard of a town named dinosaur, colorado. we just got an order from dinosaur, colorado. start an easy to build, powerful website for free with a partner that always puts you first.

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>> stocks on the s&p 500, of rally continues. rallying by more than 1% on the nasdaq. it's all down to this. nvidia has done it again, the chipmaker delivering another sales forecast but blew past estimates thanks to seemingly unstoppable demand. he also saw fourth-quarter revenue more than triple. the company's market cap is increased by more than 400 billion this year alone.

lisa may be another 2 billion at the market cap this morning. lisa: i do not understand the trajectory of exponential growth. how long can he continue? what is the multiple you play on the stock growing more than 400% with respect to revenue in a year. difficult to understand. jonathan: know your customer. i think the customer base is really important here. amazon, meta, microsoft and google. the largest customers, nvidia, a 40% of its revenue. talking about the most dominant firms on the planet minting cash. lisa: if you're worried about it running out don't be worried. they have plenty of cash to spend. at what point is there pushback about how much the margins are and how much they are charging for chips they need for their

cloud computing and generative ai offerings. so far the sky is the limit. it doesn't seem to matter when it comes to how much they can move their revenue. jonathan: we have not talked about the fed enough. minutes from the fed's january meeting showing numbers were united. only a couple of officials pointed to risk of the economy, hotter than expected inflation print since then. seeing risks of stagflation. investors should be open-minded there is a scenario in which rates need to stay higher for longer and the fed may need to time -- tighten financial conditions. for the 1970 -- >> he's been alone on a lot of calls. he's been lonely last year as well. this is the question going forward is how will they respond to inflation that seems to be continuing and how do we deal with the ramifications of that

considering what the ramifications are considering artificial intelligence has been such a game changer. for the economy, sure. >> best on the fed minutes overnight, democratic senators pretty lonely, the letters they were sending to chairman powell not sure they registered. >> elizabeth warren, senator whitehouse saying rates cannot be this high-end restrictive. you feel look at the fed minutes it's only a couple of people pointing out what this means for the economy. there's a big gap between what some senior democrats are saying and what the fed thinks where we are now. jonathan: let's turn to this stock. moderna raising after the morning -- pharmaceutical manufacture beating estimates. saying they captured a greater share of the market in the fall but it expects regulators to

have a vaccine for rsv. calling 2023 a year of transition as we adapted to the endemic markets. you've been a wonderful friend of the program over the last year so it's great to catch up with you. i want to go to the market share story. where did that come from? >> a lot of hard work and being able to communicate to doctors that the vaccines are not the same. so if you have world evidence we have less hospitalizations of people on the vaccine. we will still be partnering with pharmacies to make sure we get the message out. so it seems a lot of activities to ensure. we are 30% share in 2022 and we will have 48% in 2020 -- lisa: do investors still ask about covid vaccines or they

interested in a melanoma vaccine or using this technology to prevent cancer? >> both. there is much more to moderna than covid. they want to understand how they will grow this and those rsv sales. this franchise will be forever. but of course we are excited about the future. so it's very exciting time from a dharna because they could see products to sales growth delivered. lisa: when you talk about rsv your covid, we were talking about regulatory risk in the mood of the cdc coming out recommending everyone get the shots every year. are you expecting that to be the case with things like rsv?

>> rsv is mostly a risk for the elderly. i think the current guidelines makes a lot of sense and we are very surprised about the number of people who got the shot last year. it was much higher than any analyst forecasted. so we are excited because not only do we have a great product, a very good safety profile. but either product is approved by regulators, we could be the only product available in this. -- in this range. especially in pharmacy retail. if you think about the flu season, pharmacies are very busy. they have flu shots and covid

shots and now rsv shots. the two products available in the market, the other one is for steps. if approved we would be the only product that is prefilled syringe. we believe the health care professionals will be delighted. >> you mention covid, flu, rsv. so many vaccine so if you have this one shot, a lot of time and frankly it would be a lot easier advertising to go out and get it but what is the timeline. when can we see that go to market? >> we have exciting news for 24 is we shared phase ii data. based on the platform we have and what we've seen with covid

with rsv and flu. if it is positive you could see this available in pharmacies as early as the fall of 25. we will have the traditional flu players and covid players. >> i know we are against the clock with you, the rsv shot, what are you learning about the durability and protection it offers. based on recent reports maybe it does not last as long as the competitor they are offering. it makes me wonder does that affect approval and is not going to affect your competition against the competitor as you enroll -- role that one out? >> we are very confident about our profile. if you look at what we have in the marketplace i think it's good to be very similar to what's available. i don't think that will be an issue. jonathan: we promised you would

escape at about 7:30. thank you, great to catch up. hope is still with us. i want to talk about what happened since. have you been surprised by how much has changed or by how much has remained the same? >> both. i'm surprised by how much changed. now it's going back. nobody was going to go back in the office. and then you see a lot of ceos saying two or three days a week. we are back five days a week for managers, four days a week for employees. we've seen a huge uptick, talking to people and we are seeing we thought everyone had figured out how to use digital. there was talkers never get to be cash again. so everything changed pretty materially and i think we thought it would be for good and we are seeing it swing back.

earlier we saw huge vacancy rates two years ago. the expectation is they would shed office buildings. we were seeing headquarters -- we would see headquarters shutdown and we are not seeing that. >> are they coming back beyond the junior bankers because they want to or you're forcing them to? hope: i would like to say it's because they want to. there's a mix in it. we do still have the flexibility we had before. getting to know your colleagues, we lost a lot of that with virtual work. one of the things first horizon we've a long tenured voice and at least long tenured clients. to build that relationship with our associates we still have that fall away. >> we talk about consumer

behaviors, of the fact everyone's been traveling and people spend in a different way. how was that manifesting and what your clients are doing and how you are seeing opportunities. >> i don't think there's any areas that are less appealing. clients want to be there for whatever they do. on the consumer side we haven't seen spending far off the way we thought it would. 500 basis points of rate increase, seeing a lot more unemployment. we are not seeing that. consumers are healthy in this economy. they still have discretionary money and on the commercial side they are still employed still creating jobs in our local markets. one of the great things i get to do is meet with our clients and see the new projects they are putting up and i visited two sites where 300 jobs in some of our smaller cities by the loans we were giving. we are continuing to see a

strong economy especially in the southeast. jonathan: why america needs more than 4000 financial institutions. we don't see that model in canada, why do we need it here? hope: i'm not sure we want to go to five. the u.s. economy is so healthy and our average loan size for first horizon on commercial banks is two to 3 million so the clients we are serving or not the same clients but won't be able to get loan terms from jp morgan or citibank, i'm sure it's not 200 million. the regional bank so the main street banks, in the markets, they know their clients, they are excited to fund a new project that brings 100 jobs. there is an ecosystem in the u.s. that the banking system

here provides for. jonathan: looking forward to talk federal interest rate and reserves for you. lisa and i have been talking about this over the last 18 months. >> some people save the shape of the curve. that's the reason we are struggling. jonathan: let's schedule an update on stories elsewhere. sonali: the latest quinnipiac university poll showing a majority of voters that president biden's age is a major issue heading into the election. 81-year-old biden -- only 34% say he has the mental fitness to remain in office. donald trump got slightly higher marks with 41% of respondents saying he is too old to run braided trump would be the oldest person to be inaugurated if he wins. a woman builds one of the next likely candidates to be the ceo

of goldman sachs is reportedly leaving the firm. she moved into her latest role running the financing unit after being passed over for cfo and 2021. no woman has been appointed to the role of chair, ceo, president or cfo in the company's history. impacts of aircraft delivery day -- delivery delays. the airbus 350 would get pushed back. while air new zealand now expects its new boeing 787 to arrive next year, these were due to be introduced on flights to new york in chicago. that's your bloomberg brief. jonathan: up next, looking for clarity on the path to rate cuts. >> we should not overreact to one month of data. markets really did and i don't think the fed did paid >> live

from new york city, that conversation up next. ♪

jonathan: live from new york city, equities and the s&p 500 up 1.2% on the s&p. tweet of the day, we talk with guests about this. 2 billion-dollar delta between the revenue forecast translating over $1 trillion a month in cap gains this morning. more on that little bit later paid under surveillance this morning for clarity on the path to rate cuts. >> the data needs to be good, not better. there were a lot of anomalies in that data. we need to see more. yet we should not overreact to

one month of data. the fed looked through a lot of the noise. >> fed minutes from the january meeting show officials warning against cutting interest rates too soon. muddying the path to rate cuts. saying the fed will likely initiate the first rate cut at the may or june meeting assuming inflation trends lower. caffe let's get to that. your take away from the fed minutes yesterday. >> they were more hawkish than i expected because they contrasted with the tone of fed chair powell's comments. i'm surprised to see more reluctance on the part of the committee to initiate cuts. i do not think that changes the story one way or another. i would agree with the comments, but there does seem to be the

start of rate cuts. i think they just need more data and they need more evidence that inflation will stay there. >> we have to wait until july for the first rate cut to be priced into the market. i'm wondering how you are thinking about what this new hawkishness, this one or two data points that don't necessarily make a trend but does make a market. how much that's affecting your view going forward. >> we are still in the may or june camp. we've been on the more moderate side of things. but i have not changed that call yet. we see huge jumps in jobs or a huge jump in wage growth then we might push it back further. but i think at this stage of the game to try and assess what they

are thinking in terms of the first rate cut and the path after that. >> how much weight do you put on current market pricing. should we consider it just as a weighted average of multiple views. we spoke to mike schumacher of wells fargo who said once this kicks in we will pricing 200 basis points of cuts like that. >> we've seen so much volatility and expectations over the last years that i think i agree it will shift very quickly if we get real economic weakness which we haven't seen. it gets them at a pretty good pace even though inflation is coming down the economy is pretty resilient. i think we will see economic data pricing faster rate cuts. jonathan: do you have a view on

how that kind of cycle would be. >> our expectation is in this year they will cut three to four times. i am not sure we will get to that terminal rate at 2.5% because we have a more resilient economy and if we get the productivity boon that at least seems to be slightly on the horizon, we can be hopeful we are getting an improvement in productivity. that raises the underlying growth rate. it's not inflationary our growth rate is stronger so that might mean the grade is more like 3% rather than 2.5%. >> we find a 40 basis point repricing since the end of last month. what do you like and where do you like and ready like across the curve? >> we like investment-grade corporate bonds positively

sloped by a little bit so if you want to extend duration we still think that's a good place to be. >> kathy jones of charles schwab, thank you. cfo first horizon bank still with us. let's finish with this one. a higher rate good or bad for bank stocks because for the last 18 months we've had some difficulties. >> the answer is yes, both. that's the problem is there's not one answer. 70% of our balance sheet has repriced so we have one of the best margins in the industry right now so higher for longer is better for us. we are still stabilizing with the pre-covid level. however there's a lot of banks that are liability sensitive sitting on underwater bonds and security and i think that's the current issue. what's good for banks is certainty. as soon as we figure out whether

it's good to be higher for longer or we get down to a terminal rate of 350. then i think it's good for the banks, the uncertainty on either side is really hurting bank stocks. >> how frustrating is it that smaller banks have to pay out 5.5% to their cd holders and depositors where's j.p. morgan can pay out maybe 3% to their cds because they are jp morgan. hope: it is frustrating as a cfo but as i think about it these are clients, we don't use our money markets as a way to fund the bank, they are really long deep client relationships. we went out and got 32,000 new clients for $6 million of deposits. 98% of them -- 96% of those stick with us. as a cfo you get a little bit

more comfortable with it. the frustrating thing was how much noninterest left the regional bank. up to the too big to fail banks paid that's free money. >> that's where i wanted to go. >> how difficult has it been, have you been able to attract them back due to relationships or has that ship sailed? >> we have had to push more into marketing and pushing more a decade on the retail side of acquiring new clients. we had to do a lot more, more and more people are coming into branches. the first time she's like i need this much money to send out mailers. yet we saw the campaign results and people still walking with a mailer. we are having to get back to old banking tactics in the

environments, people want shopping. >> can we finish on deposit insurance quickly. what kind of reforms are you advocating for at first horizon? hope: the tailoring of basel three. treating it for long-term debt capital hold 80's a really hard pill for us to swallow. we estimate basel three is implementing with the long-term debt would be $75 million expense based. how do you tell shareholders the tripping over 100 billion is that much more valuable to them where we have to add that much more going through debt. >> lisa wants to know if you are sending out toasters. hope: that comes up a lot. people want toasters, bobbleheads were a big one. lisa: of who? hope: i grew up in new jersey so

i still had a derek cheater bobblehead. jonathan: i would just take the cash. >> my first account i got a little folder and pens and it was very exciting. >> same one. hope: we might be able to get you a bobblehead if you want one. jonathan: i'm not sure we can negotiate this live on air. good to see you. thank you so much. the next hour of bloomberg surveillance. michael and gene seroka, the third hour of bloomberg surveillance is coming up next with equity futures in the s&p

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>> is a june? >> it doesn't matter. >> steady as she goes. >> inflation is stickier than someone have thought. >> inflation is just part and parcel of going through what we are going through. >> a lot of the inflation data we sare recently is largely seasonal and will reverse. >> this is bloomberg surveillance with jonathan ferro, lisa abramowicz and annmarie hordern. >> good morning. this is bloomberg surveillance with a focus on nvidia, the best performing stock on the s&p 500 over the last 12 months. the stock is higher by almost 13%. the numbers are amazing and the price reaction incredible. let's start with the numbers. revenue more than triples to $22.1 billion.

2021, they did not even generate that much revenue in an entire year. the prophets incredible, 86% growth in earnings-per-share year-over-year. let's talk about the reaction to the outlook. i think we need to chew over this because they are on the money. it translates in over $1 trillion in market cap gains this morning. we have all-time highs in europe, back to the highs of 1989 in japan, and the u.s. may make a high of its own later. lisa: how do you extrapolate exponential growth at a company that seems to be at the vanguard of a sea change? you do it imprecisely with a dartboard, saying it will keep going up. that's essentially what zero hedge was pointing out. when do you stop and go neutral? it's not a bearish neutral, just

how much further can we go? jon: we talked about the career risk of not being long this name based on the gains we have seen over the last 12 months. annmarie: there was one lonely seller last night that's now a hold this morning. so no one is saying you should sell this. hold or buy it. i like what the head of equity said. "insane. you almost cannot absorb how well they are doing." i feel like i am gloomy but i look at china. this is the biggest market for semiconductors. they are looking at revenue at 22%, now 8.1%. they have to stay there because with these export controls they cannot get the best chips they have into china. so they have to maintain this. even with china being the largest semiconductor space, they are still putting up these numbers. what with these look like if they were able to tap into chinese growth? jon: it rubs off on you.

lisa: we are wearing the same color. jon: the bearishness kicks in. i am with you. it has rubbed off on me. bearish. i will be wearing turtlenecks. let's play this game. guess who's quote this belongs to. this is on the capital one discover potential merger get together. "this is destructive corporate consolidation edits starkest -- consolidation at its starkest. it cannot be allowed to happen." that is not the senator from massachusetts. that is the senator from missouri. senator holly has something in common with senator warren. lisa: you sometimes have strange bedfellows in politics. we saw them agree on the banking sector last year. the tone now is firm in

washington about something going on in m&a. we reported the ftc will sue for the merger of kroger and albertsons. now you have capital one and discover. we had a regional banks ceo jonas who set our deal was going to be the last megamerger in the banking sector. do they actually think this deal can go through when senior republicans and a senior democrat are saying no? jon: someone from first horizon got to the heart of the issue big time and the frustration you have with the political debate of the moment. there is a view based on the last administration that the former president will be easier somehow for business, that these deals will come together and we will move on. based on what we heard from senator hawley last day, i wonder which way the wind will be blowing in the republican party.

lisa: and where the wind blows is where people's views are going to be. how do you create policy if you are an executive with an actual balance sheet? this is the frustration with washington and the reason why i'm trying to remain engaged in disciplined. jon: you want to talk policy and that is the issue. annmarie: whether it's the deficit, whether it's how to protect the regional banking system that did experience stress and a flight of deposits, there are real issues, this question of entitlements, of our international footprint after years of having a reputation that hinged on that. all these things are valid conversations. annmarie: they do not always win elections. who wants to talk about the deficit and cutting entitlements? no one. jon: that is why i have an issue of politicians. equities on the s&p firmer by 1.2%.

in the bond market, yields look like this. coming up on the program, edward jones official. henrietta on bipartisan efforts to stop the capital one discover deal. and you gene seroka on global train disruption. that is a must watch. global stocks moving higher on the back of nvidia's earnings. edward jones see more room to run. we don't see bubble behavior in this ai cohort because the earnings and growth opportunities seem real in this backdrop of pending rate cuts, inflation potentially moderating, we believe are remaining fully invested is a sound strategy for the year ahead. mona is with us now. i want to go to the quote we have been referencing from zero hedge. the numbers are tremendous but let's talk about the price action.

they are pointing out clearly and we can see it in the numbers that there was only a $2 billion difference between the revenue forecast and estimates and it's unleashed the monster of all rallies. what explains that? mona: i think there's a couple things we can take away from the nvidia call. there were still questions about whether this generative ai trade was real. are there real revenues being generated? is there real demand? nvidia continues to answer that for us in an extremely positive yes. i think the ceo said generative ai is at a tipping point. we are at the start of a solid investment cycle and this trend. generative ai, while people had perhaps thought it was a five or 10 year cycle, which we think we are at the early phases, we are starting today. number two, the valuations that

have come out of these magnificent seven names probably and nvidia in particular. you would expect after a 200% rally, and videos valuations may have skyrocketed. we have seen valuations come in a bit. for those who have been comparing this cohort to the tech bubble, we are not seen that much similar behavior, especially from a valuation perspective. we do think there are positives that will come out of these earnings calls but we are starting with the magnificent seven and over time we see the gains and positivity spreading to those that will benefit from the productivity, industrials, health care, cetera, down the road. jon: a friend of mine wrote to me this quote. "do i want to be right or make money. a tale as to -- as old as time."

it's easy to throw mud at some of the rallies we are seeing, particularly in the magnificent seven and nvidia. how difficult is it to not be invested in big tech given the gains we have seen over the last 12 months? mona: when we think about how these indices have evolved over time, we know the s&p 500, 45% to 50% is in three sectors, and all the magnificent seven is housed there. if you are an investor even invested in an index etf, you have about 50% exposure to large-cap technology, so it's almost become entwined with the u.s. market. it does make sense to be involved early in some of these gains where we see this long-term secular trend emerging. over time, we would expect a broadening of leadership. we think if we are in a cycle where we are not only in a generative ai cycle but

potentially in a rate cutting cycle and an election coming up as well. we think we will probably get over better inflation trends and those will help the consumer and the economy. we may see early cycle behavior reemerge and that includes a broadening to areas like cyclical parts of the market, small caps and mid-caps, and perhaps international playing some catch-up, so we want to make sure we are diversified but don't want to give up that exposure to the s&p 500 large-cap space. lisa: are u.s. government bonds diversifiers still? mona: we still think in this environment where yields are still relatively higher and we don't see the fed coming back to their zero bound, that's still a good environment for investment grade bonds. if you think about the environment post crisis where we were at the zero bound, it was

primarily a growth story. we think the next five to 10 years look like growth and value. bonds play a meaningful part in your portfolio. if you think about duration broadly, at this point, if you extend your duration to some extent, especially away from cd's or money market funds, you have the potential we believe for price appreciation as it begins its rate cutting cycle, so we think bonds are going to become a mainstay in portfolios, more than we have seen any time in recent history. lisa: are you bearish on anything? mona: we want to be cautious about -- last year was a trade of the magnificent seven, negative cap tech and probably cds and money market funds. be cautious about remaining too overweight in those instruments. we have seen that complacency

and behavior from investors who have benefited from 5% plus yields. there is some reinvestment risk on the horizon, an opportunity cost of those money markets as we have seen the s&p has been up . well exceeding money market rates. that's the only area that i would say be mindful of the complacency that comes with reinvesting into money markets and cds. jon: appreciate the answer. it's the same as the answer of the last person. thank you.. what are you bearish about? cash. lisa: that's a great way of putting it. everything we like we don't like because you are too cautious. this is giving you a sense of how full bull everyone has gone. jon: higher on the s&p. an update on stories elsewhere. here's your bloomberg green push

and ali bassett -- bloomberg brief with sonali basak. >> he's stepping down. the management changes the first since the door panel blowout on an alaska airlines flight earlier this year and boeing's ceo is expected to meet with faa officials next week as part of the ongoing investigation. minutes from the fed's january meeting show most officials remain worried about cutting interest rates too soon rather than keeping them too high for too long. policymakers want more evidence that inflation is on the path to the 2% target before they lower interest rates. officials agree that interest rates were likely at their peak but the exact timing of the first rate cut remains unclear. also watching president biden because he is on a campaign fundraising swing and is sharpening his rhetoric against russia and republicans. at an event, he called

vladimir putin crazy and laid into donald trump for comparing his legal battles to the death of republican opposition leader alexei navalny. biden's tour has included fundraisers that will add $130 million to his campaign efforts. jon: angry biden is part of the strategy. angry biden. annmarie: he has been angry. he has come out with a temper. he is sounding off. he does this when he gets into a room with donors. jon: do you think this is about the campaign showing that he is more engaged, that he's not a fragile, disconnected old man? lisa: we are talking about it's a potentially it's working. annmarie: anger sells, full stop.

lisa: he was talking about climate. this is the last existential threat. we have a crazy sop like that guy putin and others and we have to worry about the nuclear conflict but the existential threat to humanity is climate. so it was within a pitch about climate that he mentioned this putin sop. jon: next, senator hawley and senator warren agreeing on something. >> it goes to litigation, if it does. jon: that's next. this is bloomberg. ♪

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jon: stocks on the s&p higher by

more than 1%. about one hour and 12 minutes away from the opening bell. senator hawley and senator warren agreeing on something. >> there's a general allergy to any kind of concentration. the pressure to scrutinize it is intense, certainly to draw out the review. if it goes to the courts is a different question. the competitive aspect will be more compelling. jon: the latest from republican senator josh hawley joining elizabeth morning and speaking out against capital one's proposed megadeal to buy discover. the center writing sounds like the credit card companies are finding another way to screw the american people. the merger should be blocked and congress should cap credit card rates. you get the good stuff this morning.

shutdowns, antitrust, these two agreeing. where do you think the wind is blowing in the republican party? >> i think he is in good company and he's bringing more people to the party. anger says and it brings all the girls to the yard. watched sherrod brown in this situation. his commentary is more sanguine. he's in a difficult reelection race and will not allow anything to happen that will ruffle feathers. >> he put out a letter saying they need to look at this. what could congress do? because obviously the slides with the ftc and doj. >> i'm afraid to answer the question because they can not do much. i do not anticipate much beyond may be a hearing. i cannot anticipate them getting too in the weeds for the regulators who will be doing this of their own volition.

they will talk about it but not too much. >> they are struggling to keep the lights on. we could see a government shutdown. the freedom caucus is saying we will not secure significant policy changes or keep spending by the caps adopted by the majority's last year. why would we proceed when we could pass a year-long funding resolution that could save americans one hundred billion dollars in year one? what's your expectation. they have basically two days to get this done. >> they have two days and it's only $300 billion worth of the overall government spend. the big tranche is not until the following friday. what i think years we will get another short-term cr, because those cuts go into effect may 1. we're just waiting and kicking the can until then. the reason i'm here and talking to clients is to say we will have one more pond and -- more punt and in mid march to april we will get a deal that

will tack -- that will tackle the sequester, the tax bill maybe, and domesticated. >> the freedom congress letter shows the difficult position johnson is in. neither deals with the democrats and keeps the government open but loses his job. is that a potential for him? >> that is real. however, that october period when they went three weeks without a speaker is still fresh. they remember how awful that was. and they went through many members on their roster. i don't think johnson is in immediate peril. the real fight will happen in april. >> when you talk to clients in the market, what do they do with this? >> there's an understanding that on friday it's only $300 billion. clients have been like, this does not matter. it's military construction

amongst others. it's not irrelevant or anything but you can see from the temperature and urgency on the hill that no one much cares. it is march 8. the interesting thing about that week is that super tuesday is on march 5. the real government shutdown is on march 8. >> to go full circle, used to be the republican party was considered the party of business. is it still? >> definitely not. you can talk to the u.s. chamber of congress about that. they don't have that business lobby that's able to railroad through the republican party. now it's a tremendous amount of pushback. i hear things from the finance committee saying we did not get any points for lowering the corporate tax rate. the business community suspended fundraising after january 6. there's a lot of hurt feelings and that animosity grew and exploded during the trump administration. i forget has gotten worse. >> there's this lingering

perception from the last administration that trump is business friendly and we will get more of that when he's back in power. you say we want. >> tom donohue would tell you he's not business friendly and the republicans will go to the man to combat esg aggressiveness. we did not get a tax extenders bill last year when we could have and do not think we will get one this year because the shifts are giveaways to corporations nonexclusively siding with republicans anymore. jon: what kind of policies are you expecting if it is indeed the next one? >> we will extend the 2017 tax cuts. keeping things neutral will cause $2.7 trillion. the street considers that a fiscal using. but it's incredible because if you look at history, since tax cuts started, they don't go up.

they keep going down and we get extenders packages. the same thing happened in 2010, 20 12, both hundred democratic presidents, and that's what the agenda is likely to show when it comes out most if not all of the tax cuts for individuals under 500 k will be extended. >> you say once they have done that there's not much space for them to do anything else? >> they cut taxes, do not raise them. they let some expire but that's as close as they get. >> good to see you. i think i got to some of the issues you are focused on. >> the fact that there's not going to be any financial discipline in washington. there was a 20 year auction yesterday they did not go well. moving on, it raises the question, they are not going to deal with taxes going down. entitlements don't go down either. so it has to give and what does this become a real conversation?

>> they are talking about the same thing. our colleague out of london once is to ask are we being spied on? the port of los angeles director coming. cybersecurity is a focus. >> very much. >> front page of the new york times this morning has a lot to do with this in terms of chinese spying. >> that's the back half of the show. look out. coming up, breaking jobless claims. the reaction with michael mckee and michael there -- and michael darda. from new york, this is bloomberg. ♪

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>> equity futures on the s&p shaping up as follows. posited by 1.3%, one hour away from the -- positive by 1.3%, one hour away from the opening bell. positive by .2%. waiting for jobless claims. the previous number is 212. jobless claims exceptionally low. we have not seen numbers like this one. it gets better. >> this is interesting news

because this is the week that represents the february payrolls survey. 201,000 initial jobless claims last week, down from -- a decrease of 12,000 from the previous week, so we only went up by 1000. continuing claims up to 1,862,000. that's a decline from a revised 1,189,000. we are catching up with the continuing claims. the bottom line of these numbers is -- at the moment. > let's run through the boards. the equity markets still near session highs. the equity market because of

nvidia and ai couldn't not care less about what's going on in the bond market seemingly but we should talk about what's going on. we have a basis point move higher at the front end of the curve. if you go back to when the fed last met, the two-year closed add something like 4.2%. we have repriced 50 basis points of the back of decent payrolls data, hot cpi, hot ppi, and now jobless claims dropping back. >> what i find interesting is not so much the front end but the 10-year yield, now at the highest going back to november of last year, rising faster. this to me is raising a question about whether people are now considering what happens when you get strong growth despite 5.5% fed funds rates. does this mean the inflation rate will be higher and the growth rate is greater than people think? >> the stock market is ignoring this, the bond market is not.

the dollar is stronger, the euro almost unchanged on the session. this data over the last month seems to be shaking up market-based expectations of the fed but does not seem to be shaking up the federal reserve. how much weight are you putting on it? >> obviously the data are suggesting something is happening in the economy. these are all one-off so far. one cpi report, one jobs report that revised a previous one. you go to the minutes and usually they don't mean a lot but in this case the markets have taken it as having some meaning because the fed was pushing back against the idea of early cuts, which was the market thinking at the time, but now the market is taking this as maybe they knew something, but we didn't know about how strong the economy was, so we are seeing a repricing toward where the fed has been, so it's not going beyond that yet.

it does tighten financial conditions. you mentioned the potential growth rate may be being higher. that will be the next debate. how did they go? there's been comment from fed officials about the possibility the neutral rate is higher. we will see if they can calculate. when you look at them, there are about 20 different models. >> you said financial conditions are tightening. you get a couple basis point move on the bond yield higher but we heard the biggest risk out there is having cash because you need to reinvest because is going to be an amazing year. at what point does that become problematic for a fed that gave a nod to that by saying this could stall some of the progress on disinflation? >> we were reminiscing about alan greenspan and his irrational exuberance comments and the fact that the market a couple years after that blew up. does that happen again? we don't know.

it's basically invested in seven things. so the fed looks at that and says what about the rest of the market? is the rest of the market being overpriced, which we saw in the 1990's? the officials i have talked to have said we don't think so. they are keeping an eye on nvidia and others because bubbles can pop, but it isn't broad. >> thank you. equities at session highs. let's run through it. bond yields are higher off the back of hotter than expected jobless claims. the right kind of downside surprise. yields are up. looking out further along the curve, up two or three basis points. the dollar stronger. you can see this on the chart. jobless claims chart. the euro against the dollar is positive by 0.1 percent. mike joins us to get into these numbers. let's talk about them.

jobless claims coming in at 201,000. previous week, 213,000.how much weight are you putting on this data? how much weight are you putting on that? >> thank you for having me. if we focus on those, the discussion would rapidly shift to when is the fed going to raise rates again, which you had a small minority of people talking about, but we had other data that was soft. retail sales for january were missed. industrial production and manufacturing were soft. in the broad context, i think the data is more mixed, but those fed minutes i think were revealing in the sense that we do see the fed continuing to push back on the timing and magnitude of the easing expected coming into the year and we have

been writing about the consensus view that seemed to shift to this idea that we have no recession for an economic read acceleration and six rate cuts and that did not seem to make sense. our view was you get the cuts if the economy weakens and if it doesn't the fed will be pushing back and that's what we have with the 10-year yield up. >> you said timing and magnitude. what kind of timing are you thinking about now. >> i think they are up about 300 basis points so that's a fairly big move we are not seeing a breakout in bond market inflation expectations here. but perhaps not until this

summer. it will depend on the data. what chair powell is saying is we don't know what the neutral interest rate is. it will depend on how the economy performs. if the labor market is holding up, so-called financial conditions are accommodative, then the fed will not have a compelling reason to start cutting rates in any meaningful sense so i think it is data dependency to an extreme for the fed. >> we can have 12 months of economic data. look at 2023. unemployment was south of 4%. we were at 5.5% for much of the back half of the year. what did we learn from that? >> what i learned was that i think we had a fairly big positive supply-side shock last year. that was the surprise. if we look at real growth, it

accelerated last year. nominal growth decelerated. that's the textbook supply and demand definition of a positive supply shock. yet some of the early reads on inflation coming into this year don't look so hot. you mentioned the cpi. so we're probably looking at a fairly warm pce deflator for january. so if that positive supply-side stock is mostly behind us, then i think we will see the economy decelerate through the course of the year, but expectations are pretty high here given the surprise last year, which is real growth accelerated but for the fed,, they control nominal variables so, restrictive -- so if the policy stance is restrictive, we would expect nominal growth to slow. in the fed thread the needle on the neutral rate in a way that preserves the business

cycle? that's yet to be seen even though you have people jumping up and down and taking victory laps. soft landing so far. the final chapters have not been written yet. >> there's a lot to unpack. i want to sit on the idea that continuing claims fell last week and this is going to be one of the key contributors to the february jobs report given the fact that we are looking at a decline in initial jobless claims on the week. at what point does this data speak to a resilience that you are not expecting that makes you change your expectations for the year? >> i certainly think that the claims data has surprised to the upside. we did see a dip in initial and continuing claims that seems to have unwound. we are getting a stronger session -- a strong recession signal out of the continuing claims data up year-over-year.

we will see whether that is sustainable. one thing that makes me nervous about completely embracing the claims data in an unadulterated way is the nfi small business datab we got from january, that's a powerful although volatile forward indicator for the employment rate. sometimes claims tend to lack the cycle a little bit. going into the 2007 downturn, jobless claims did not make a recessionary move until the spring of 2008. they are important. let's watch the claims data. let's give them credit for hanging in there. the picture looks good if we isolate the claims numbers. but there's a broader story to tell. >> is that you still see recessionary signals later in the year? >> i'm still worried that we have not soft landed yet. the fed will be pushing back on

the timing and magnitude of the rate cuts and that does create the risk that if and as things slow, the fed will fall behind the neutral rate curve, and that is how business cycles tend to end. so historically, that's fairly rare. when we have seen that, we have been at a cycle peak or six-month from recession, so the lags do look longer than the average historically, but we are not out of the woods yet, and the consensus view seems to be pretty coalesced around this idea that we have successfully soft landed and are out of the woods and have dodged the recession bullet and that is not our view. >> another hot data point. appreciate it. soft landing so far, the final chapter has not been written yet, his words. the data looks tremendous. jobless claims dropping. an update on the network outages

stateside. with your latest is sonali basak. >> at&t, the largest wireless carrier in the u.s., is confirming network issues and service disruptions. thousands of customers reported issues of starting around 3:30 a.m. eastern. an at&t spokesman saying we are working urgently to restore service and encourage the use of wi-fi calling until it is restored. the cause of the issues or the number of people affected remains to be seen. verizon and t-mobile both say networks are working normally. when a piq to it he -- a showspoll the majority of voters don't think -- only 34% say he's got the mental fitness to remain in office. donald trump getting higher marks with 41% of respondents saying he is too old to run.

trump is 77 years old and would be the oldest person to be inaugurated if he wins. google is pausing image generation of people on its ai service. the platform is coming under criticism for how it handles race. users on social media pointed out historical figures were being portrayed in a variety of methods cities and -- of ethnicities and genders. google responded by saying it generates a wide range of people and that's generally a good thing but it's missing the mark here. jon: i will not comment on that story. can i say, turning around and telling people to use the wi-fi is the most ridiculous thing i have ever heard? what did they think we were going to do? lisa: just not use the phone. jon: thank you. lisa: how many hours was it before they acknowledged it? jon: it's been more than five hours. annmarie: it is like when they tell you your computer is not

working. did you turn it off and turn it on? jon: this is what it feels like. next, global trade disrupted. >> we have retooled our network completely and expect to do that for a while until we have safe passage reopened in the red sea, so this could be with us for a while. jon: that conversation up next. ♪

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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. jon: good morning. equities posited by 1.3% on the s&p. under surveillance, global trade disrupted. >> we have changed our network, sailing everything

south of the cape of good hope, and expect to do that for a while until we have safe passage reopened in the red sea, so this could be with us for a while, but we are working with all stakeholders to shorten this crisis as much as possible and get back to normal trading. jon: red sea tensions and a drought in the panama canal disrupting global trade as president biden increases u.s. port security. officials saying over 200 ship to shore chinese -- can be programmed remotely. the port of l.a. director saying he's ready to work on this effort after establishing cybersecurity operations in 2014. good to see you. our chinese cranes spying on us? >> they are looking at information. 53 say that 53% of the port --

yes. >> this is what the u.s. deputy national security advisor had to say. we felt there was a strategic risk here, these cranes, because they are moving the containers. if they were encrypted in a criminal attack or rented by an adversary, that could have a real effect on our movement of goods. the u.s. ports use 80% of these cranes owned by china. this is a massive risk? >> it is a risk but who else makes the koreans? that was the emphasis and part of the discussion. that they had with the media the other night. and further on more discussion taking place today. how can we create that industry in the u.s.? to build these big cranes that are up to 200 feet tall managing these large ships.

>> have you been up -- been made aware of any wrongdoing or is this just a concern? gene: this is a watch out for all of us. we implemented the nation's first cybersecurity operations center in 2014. last year, that cybersecurity operations center stopped nearly three quarters of a billion cyber intrusion attempts at the port of los angeles. we then created the cyber resilience center and are bringing in over two dozen entities partnered with ibm stopping intrusion attempts that people were not aware of. jon: this is a busy time for your report. we have ships rerouted away from the red sea. we have low water levels in the panama canal. what capacity are you running at? gene: we are between 75% and 80% capacity. january was a big month, of

about 18% from last year, a combination of a number of things. long-term labor deal in place with our dockworkers and a jump in market share. i was in india and southeast asia last month and what customers were telling me was they are moving more of their cargo away from traditional routes through either the suez or panama and targeting that to the western u.s. jon: how much of this increased business is down to an increase in underlying activity because business is ok and how much of it is just rerouted from other places? gene: it's a combination. stability in the market, rerouting of cargo, and six consecutive months of cargo growth. there continues to be stocking and distributions -- distribution through fulfillment centers. >> how much of it is being rerouted not only from there but

the east coast because of concern of a labor shortage or strike? gene: all of it anecdotally. what i don't see yet are traditional vessels in those other routes being pointed at the direction of lawsu -- of los angeles. it would be akin to going over singapore. that's what it looks like. more people are booking on our traditional services coming tell leah across the pacific and of those other services are rerouting around the cape of good hope, adding more vessels into the existing strings to make up for that transit. >> to tie these ideas together, the idea of chinese cranes and they are not being made in the u.s. and trade picking back up even if people have to reroute boats, is the whole concept of near shoring a fiction?

and we have the same concept we always had? gene: what we are seeing in these conversations with companies are that it's front of mind every day. in our industry, whether it was building containers, the trailers that all the cargo, many from washington's in the manufacturing community are asking how can we take over that manufacturing process, at least on a percentage basis? jon: you talked about the labor contract on the west coast. i remember talking to marty walsh about it every month. it might be in the east coast's future. what are you expecting to take place on the east coast? >> i was texting with the acting labor secretary last night. she will be in los angeles for a chamber of congress meeting -- of commerce meeting. the east coast people have their contract coming up this summer. remember they have not gone on

strike since the mid-1970's. there are big issues. these workers have to be paid. the companies must bring more cargo in. and there's specificity around automation or robotics that have to be addressed. it's a big issue and you'll will see some get nervous and shift their cargo away like we witnessed. jon: did you see that as a moment in time or a new regime, the labor contract? gene: it's part and parcel of an entire labor movement across the country. in l.a., whether was the school district, the actors and writers, the uaw in detroit and upper midwest, and now what we are seeing in our transportation industry, the ups contract with teamsters, people worked through the pandemic with no regard for health and safety. they were out there trying to keep the economy moving. record profits in our industry. have to pay these people what they are worth.

annmarie: what was notable as that was a six-year contract. do you expect that going forward, that we could potentially make these contracts longer? gene: it all depends. traditionally, in our contract on the west coast, they had been six years in duration, but in more recent times, we saw protracted negotiations getting us off caliber, and some extensions in the last presidential administration in washington because there was some trepidation about how that group would react to the labor movement, so it's all over the board, but getting back on a more normal calendar would be great for the industry. jon: busiest january on record? gene: correct. jon: thank you, gene seroka port of los angeles executive director. i think he said they are kind of spying on us but not really because we don't know what they are doing. annmarie: it sounded like

estimate. jon: a slight less. lisa: everyone is spying on us. who is not? jon: at&t is not. lisa: not this morning. you can call it data collection or whatever you want. the question is what do you do with it? jon: good to see you. tomorrow morning, catching up with mohammed opal bloomberg opinion, peter cheer, amy silverman, jay. the opening bell 34 minutes away. equity futures on the s&p 500 positive by 1.35%. nvidia check. there we are. up 12%. just 12%. amazing. a big market cap move in 34

minutes. we will catch up with you tomorrow. this was bloomberg surveillance. ♪ the first time you connected your godaddy website and your store was also the first time you realized... well, we can do anything. cheesecake cookies? the chookie! manage all your sales from one place with a partner that always puts you first.

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>> from new york city, i, dani burger, in for jonathan ferro. the ai hike cycle loses another day. the countdown to the open starts right now. >> everything you need to get set for the start of u.s. trading, this is bloomberg, "the open," with jonathan ferro.

dani: