>> we've come off a strong earnings season for a lot of companies and we -- that's why we've started very strong. >> the tech sector is strong and it looks like that will continue. >> following the exuberance now still matters a lot. it tells us that there is more positive momentum to go. >> this earnings scoring is real. it's real. if you don't buy it, you are going to be left behind. >> this is bloomberg surveillance with jonathan ferro, lisa abramowicz and annmarie hordern. jonathan: good morning.

the s&p 500 market totally unchanged, feeling the pain and pain has a capital ai. we got it wrong. lisa: it partly reversed their stance as a result of underestimating the ai boom. i love the ai, the capital ai in pain. jonathan: especially when he got basically half the story right. he got the economy right. here comes the difficult bit. what does it mean for stocks? that's what he got wrong. lisa: the fact you didn't have a disorderly -- rates. people said it was ok, it was not going to harm the stocks. my question is positioning. how many people are continuing to feel calm versus selling,

particularly on hedge funds, to try to cash out. jonathan: you missed jake. he was fantastic, bullish and constructive. have they truly done that? or are we talking about one earnings report from one big company? lisa: you can say it's just nvidia and that's it. but if you look under the hood, earnings expectations and performance has been better than expected. it's earnings going up from an expected one point something to seven point something year-over-year. this is an actual story if you look under the hood, as much as my skepticism wants to say no, everyone is just on something, it seems to be. jonathan: we missed the skepticism on friday as the markets were heading toward another all-time high. that's talk about the politics. let's play good news bad news

with nikki haley. another double digit loss , another double-digit win for donald trump. the good news is it could have been worse. it could have been 30% or 40%. annmarie: she's going to stay in through super tuesday she said. here's how i would categorize what happened in south carolina. it was the race of domination by the former president and his domination continues. he's likely going to be the nominee after mid to end march. it's also one of division. that nearly 41% nikki haley was able to get shows this will be an uphill battle for the president when it comes to the general election. six in 10 nikki haley voters say they would not support donald trump in the general election. that's the other part of the party he's going to have to bring in if you wants to win november. jonathan: we spent weeks --

what have we learned from the koch brothers? annmarie: they are not willing to finance it any longer but they have a strong endorsement in her. since they don't see her path to win, they are looking to put the capital elsewhere. they are looking at down ballot races to shore up more conservative lawmakers. lisa: they are not putting money in the trump campaign. i think that's interesting. if they are not giving it to nikki haley, at least they are not giving it to trump. annmarie: this is the division. south carolina showed even though trump dominated, how difficult the division will be for him. jonathan: look out for that conversation on the story. i want to turn to the price action, futures on the s&p 500, almost totally changed -- unchanged. for 24.81 -- 4.2481.

the x y negative for five consecutive sessions. lisa: kit jukes is so entranced by this particular pair that his headline for his paper was the dollar stopped rallying or moving at all and was talking about how we know the narrative on all sides. kit jukes was channeling my sense of stasis. we know the story. jonathan: i'm not trying to sell it as an entertaining story. i'll say this. international got interesting last week. nine days of gains in chinese equities. i think tpw's philosophy was when everything is not investable, you should take a look. lisa: tradable is a nice way of saying maybe people are holding out hope that this time stimulus be cutting great you heard from the chinese government some

promises of the desire to invest in more durable goods. annmarie: the ccp meeting is next week so everyone is looking at potentially will there be more. if you're not going to be willing to fight the fed, why are you willing to fight the ccp? especially when we know they don't like if you sell stocks. jonathan: don't fight the ccp, one of the headlines. equities are doing ok. coming up, we will catch with sophie lynn yates -- lund-yates. jennifer fitz and and lindsay. we begin with the top story, the rally behind nvidia pushing stocks to all-time highs. there should be questions about how sustainable nvidia's 98% market share of gpu's is. there is also the relatively

high risk from the fact the five companies make up half of the customers. we should talk about the big five. they are some of the biggest companies on the planet, some of the most profitable companies around the world. is that a source of concern? >> i would start by saying you are absolutely right, the calendar of these customers means this is not as straightforward a conversation as it would normally be. but, there is a big but in my opinion. having side customers make up around 50% of revenue, that level of concentration is too high for me to be fully comfortable. i'm not saying this is a warning sign situation because of the nature of these companies that are making up that call. -- core. but you would like to see more diversification going on, particularly when we look at the

fact that more of these tech companies are toying with the idea of bringing tech in-house. that's not going to happen overnight but it's something to keep an eye on. jonathan: talk to me about the names, the names that are spending increasing amounts of money on this tech. how big is the risk for them? >> absolutely. so, i mean, it's definitely not risk-free is how i would phrase that. in terms of access to the tech that you are referring to their, i don't think that we are going to see anything switching off overnight in particular. i do still think that nvidia is a secure pair of hands. at the same time, when you are looking at what these companies are spending, margins are a question mark for me. i think that is a risk that is currently slightly underrecognized from my

perspective. lisa: what do you do with that? do you move to a neutral position for u.s. equities because of the dominance of nvidia? or are you going to say you have to go with the flow because that's where the crowd is? >> i think times like this, it's an incredibly important reminder to not have all your eggs in one basket. it's an overused phrase but it's an important one. i don't think we should be ignoring the likes of nvidia or pushing them to the wayside because of this frothiness we are seeing and that concentration. this is a higher risk option at the moment. but, that doesn't mean ignoring ai. it just means making sure you are also keeping an eye on those companies that have stable income from other areas as well. it's not just purely ai driven. there are names in the sector

that is still a lot more diversified and they are more compelling. lisa: how about the granola's and over in europe? how about those that have the chance to benefit from the ai revolution and other things? >> absolutely, i think europe as a region, there are corners of the market that are not particularly exciting or compelling in my opinion, not to sound too harsh. i think they hold a lot of promise because they are flying under the radar a little more, that makes them more interesting. especially when you look at the valuation metric. to strip it back even further, into some of the options, particularly in the u.k., there are some sectors, some bread-and-butter stocks. i'm talking about financials in particular. the valuation situation is compelling.

they are trading at less than the value of their assets. they have incredibly well-capitalized positions, which exposes lucrative returns and dividends. europe and the u.k. are interesting options for those who want to have a look. lisa: if you look at the standard chartered, they are heavily exposed to china. does that make you nervous at all? >> yes, absolutely. it certainly has more fingers in more challenging pies, shall we say. i think that when you look at the broader business model for me, that's something that is particularly compelling. it has a lot more income coming in from the likes of generating businesses, transactions, your private banking. that side of thing. i think it is exposed to emerging markets as well and that makes it more interesting.

that's not nothing. i would say that potentially we have seen the worst of that now, which could open up some opportunity to take more risk. jonathan: how relevant our interest rates to this equity market? the index specifically was where to year yields climbed off the back of data. we spent more time talking about nvidia than jobless claims. how relevant is that to the equity risk at the moment? >> it remains incredibly relevant. we are seeing unprecedented times in that macroeconomic data is not being considered as seriously as the likes of nvidia results. which, to me, is bonkers, but that is the world we are living in. absolutely, there is, of course, always going to be an intersection. it absolutely does still matter. sentimental will be needing to be driven by the outlet

statements. all eyes are on the data coming out on thursday for pc numbers. i think we could be in for unpleasant surprise. jonathan: thanks for the update. we are spending more time listening to jensen than jay. yields climbed for a fourth consecutive week. equities at all-time highs. lisa: we said this before. it's coming with earnings. they came out with a note saying there had already been 76% of the companies that were reported so far this season that have beaten expectations. there had been expectations for a 1% earnings growth year over year for this particular quarter. instead, it's on track for 8%. that's what we are talking about. it's not just nvidia. that's what some polls would .2. jonathan: this is the handoff. no drama to kick off your monday

morning. let's give you an update on the stories elsewhere. here's your bloomberg brief with dani burger. >> -- the bid is likely to face close regulatory scrutiny. china is said to prefer a foreign buyer. this creates a to my for ubs. choose the higher bid from aunt or the lower offer from citadel. ryanair could be forced to pare back its schedule due to delays in boeing jet deliveries. they may receive fewer than 40 boeing 737 max jets before the end of june. they originally wanted 57 jets between the summer of 2023 and 2024. the ceo says it will likely drive of european affairs this summer. jp dimon and his family have

sold $150 million of jp morgan stocks. he and his family sold more than 800,000 shares on thursday. shares are at a record high. that is your bloomberg brief. jonathan: up next, hope fading for nikki haley. >> i'm not giving up this fight when a majority of americans disapprove of both donald trump and joe biden. >> we are going to be up here on november 5 and we are going to look at joe biden and we are going to say joe, you are fired. get out. get out, joe. jonathan: that conversation coming up next. live from new york city this morning. good morning. ♪ ♪ . -how? -a.i. (impressed) ay i like it! who wants to come see the future?!

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jonathan: live from new york

city, good morning. equities on the s&p 500, almost totally unchanged after closing friday and another all-time high. the 10 year is 4.2461. hope fading for nikki haley. >> there are huge numbers of voters in our republican primaries who are saying they want an alternative. i'm not giving up this fight when a majority of americans disapprove of both donald trump and joe biden. >> i just want to say that i have never seen the republican party so unified as it is right now. we are going to be up here on november 5 and we are going to look at joe biden and we are going to say joe, you're fired. get out. get out, joe. jonathan: a major win by donald trump in the south carolina primary, easily defeating nikki haley in her home state. haley not backing down as

michigan heads to the polls tomorrow and super tuesday on march 5. the math is showing that even with the most generous assumptions for haley, trump will win enough delegates to win the republican nomination by march 19. jennifer fitton joins us now. it's another double-digit win. iowa, new hampshire and south carolina. you were working toward -- looking to certain counties of south carolina, including charleston. can you tell us what we took away and what the lessons were from her performance? jennifer: she did well in columbia, charleston, urban areas and suburban areas. she is pulling from a demographic of more educated, sophisticated voters. that tends to be the kind of voters that come out for primaries. these are high information voters, typically. in the rural areas of south carolina and blue-collar workers, that is donald trump's

stronghold. it will be interesting going into michigan, to see if we will see the same sort of demographic breakdown. annmarie: michigan and then super tuesday. what else are you looking for in terms of specifics? jennifer: michigan, i'm not only looking at the haley-trump, but i'm also looking at this dynamic with president biden. there is a movement right now among the arab community there, especially around dearborn, to vote uncommitted. that is intended to send a message to be president. but i think it will be a major headline issue after michigan. of course, looking at the numbers, looking at the breakdown, looking at some of these exit polls from haley-trump, then that will tell us something going into the big 16 states on super tuesday, march 5. annmarie: i was struck by some of the fox news analysis on voters.

six in 10 nikki haley voters said they would not support trump in the general election read what does he need to do to encompass the rest of the party by november? jennifer: this is typical. primaries are divisive. in south carolina, nikki haley is a daughter of south carolina. you can see the passion for her. and donald trump is just a figure, a character, that is a known entity. he is a quasi-incumbent. he's really going to have to work his folks, his campaign and especially in the battleground states, really work to unify the party over the next several months. lisa: i want to pick up on michigan and this question of how muslim americans are going to vote, given the fact a lot of them are possibly saying they will sit out of this election and they had previously helped president biden win the election. what are you looking at to understand just how entrenched some of the anger is and how

that's going to affect the michigan race? jennifer: i listened to a congresswoman from michigan who has her thumb on the population there. listens to them, understands them, she's a messenger into the white house. she often sort of throws a flag and says look, you have to pay attention to these folks and she really works for the white house to get them in contact with the right people there. that, there is a lot of anger. these are people who are really suffering with their family members overseas in gaza. i'm going to see what kind of movement comes out of this campaign to get these voters to stay uncommitted. and then to see over the next several months what the white house does to mend that pain. annmarie: -- lisa: how has gretchen whitmer played into this? she's been the frontrunner for

the reelection campaign of president biden. it seems to have struggled to tow this line. what's your vision for what she's going to do next? jennifer: i was watching the sunday morning shows this weekend. she's a strong surrogate for the administration. she has taken the mantle of the abortion issue. and made that her main issue, going into this election, trying to be a voice for the white house and a surrogate on that issue. the white house, the biden administration and the biden campaign, it's all going to be about jobs and democracy. i think she's going to play big role there. jonathan: a final word from me, what is the endgame for nikki haley? what does it look like in the next month or so? jennifer: she has told us she's staying in in toll super tuesday and then she will reassess -- until super tuesday and she will reassess after that.

i think you will see after super tuesday, you know, she probably won't have that same donor base. it's already starting to waver here. she will have a path forward. look, i mean, this is going to end rather early, this primary season. i don't think she's doing any damage to herself, going up to super tuesday, necessarily, for future prospects. but staying in past that, i don't know if that's going to be a positive for her. my question is when she does leave the race, is she going to endorse trump like she promised? and then, will she sneak away like desantis or will she endorse and be a surrogate for the election? jonathan: for those of you outside of the united states that may have missed how this played out on saturday night, 7:00 p.m., as soon as that state and the voting closed, that state was called almost immediately.

camera pans over to south carolina, who's on the stage? donald trump. what didn't he talk about? nikki haley. annmarie: he doesn't need to. he's preparing himself for the general election. to the point is that after march 5 and super tuesday, there is super tuesday two, another big day of states. march 12. he could have this wrapped up by the middle to the end of march. it's about coming out and saying we are taking this fight to joe biden and he's ignoring nikki haley and it's working. jonathan: what does nikki haley do? endorse and then run away and not talk about it anymore? annmarie: nikki haley has gone very far in being very critical of not just trump's policy but mental acuity and competence. that's an issue that trump and himself and the campaign might have. lisa: this is a rematch from four years ago that's not going away. who's going to hold the mantle?

we are seeming to run out of candidates. annmarie: greg valliere has talked about maybe she becomes part of this no labels. does that ostracize her from the future of the republican party? whether it is trump or biden who wins, there will be no incumbent in 2028. jonathan: that's the campaign for nikki haley. it's not a good primary campaign. it plays well on the national stage. lisa: does it just die? or does somebody else take up the mantle and start pounding the table? jonathan: i'll say the easy thing. we will see. because i don't really know. from new york city this morning, good morning. ♪ y coach in the chase mobile® app. use it to set and track your goals, big and small... and see how changes you make today... could help put them within reach. from your first big move to retiring poolside -

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jonathan: live from new york city, kicking off a new trading week with s&p going nowhere. going somewhere last week, that's for sure. the nasdaq, another week of gains. you know what was down? the russell. one third of 1%. lisa: here is where interest rates matter. here's where fed policy comes into play. this is arguably the sector that is most leveraged to raise hire for longer. good economic data is good news for -- less so for the rest of america. jonathan: replacing yields

higher at the front end of the curve. four weeks of gains on a two year yield. we talked about the 4.2 level, that's where we ended january at the end of the fed meeting. repricing rates at the front end by 50 basis points. at the long end, we have a 10 year that is 4.2461. this way, you get some supply on the two-year and the seven year. lisa: two and five-year today. seven year tomorrow. the key metric is the pce report, the core inflation metric that comes out on thursday. do we get a sense this is sticky? if so, how much does that change the narrative that stocks can keep separating from bonds? i call into question what sticky inflation looks like. jonathan: the fact we talked about nvidia more for good

reason and have not said anything on jobless claims. jobless claims are at 200 k. i know it's the first friday of the month. jobless claims near 200 k, a massive report for the month of january. if you get that confirmed in february and you get two months of that, we will see how calm and collected we are about the repricing that is taking place in the market. lisa: people don't seem worried about a runaway inflation. they are saying numbers look good now and will soften. they plan to credit card delete and with cease -- delinquencies taking up. -- ticking up. if you worry about stickier or stronger economic activity, that will shift the narrative in a way that people are not prepared for. it does not seem like anyone is counting on that. jonathan: do you worry about shift in the fx market?

i know we have not broken out of this range but more recently on the dollar index, the ex-wives shared some weakness, even in the face of decent data stateside. lisa: it shows that basically if you look at the positioning under the hood, what he was saying was you can see people are trying to position short dollar. they are trying to move to the next cycle of the face -- the next phase of the cycle. that's why you are not seeing some sort of break out. this does tell you that if we do get some better than expected data in europe or if they cut rates first or whatever, that could be the catalyst for something more interesting than this. jonathan: let's get to your top stories. this one more interesting. cathie wood, selling into the ai frenzy.

trimming shares of taiwan's semi conductor and nvidia on friday. they are missing out on the rally in the world's largest chipmaker and is lagging the s&p 500. coinbase and tesla are lower to start the year. this is what underperformance looks like off the back of not holding enough of what is really outperforming. we talked about this last week. the career risk now of not opening nvidia and the repeat act in 2024. lisa: the career risk of being contrary and or less loved -- moving to less loved stocks is highlighted by cathie wood. she has gotten a number of calls wrong and is the poster child of a lot of the tech enthusiasm in all directions. hedge funds are cashing out of a lot of tech stocks right now. they are trying to cash out,

shift and rotate. this hasn't worked again and again and that is where the dilemma is. annmarie: she says the three symptoms -- synonyms, easy, expected, obvious. when nvidia results came out, they had a sell. the next morning, when you see what it does aftermarket, they had a quick hold and by. jonathan: some of the things you said, you could have said in 2023. easy, obvious, expensive. annmarie: it's hard to be a contrarian. everybody is staring in the face of it and having to load in and it goes against everything ingrained in good investment thesis. jonathan: do you want to be right or do you want to sound smart? here is your next story, the white house, wrapping up

pressure on house republicans to pass aid for israel and ukraine. jake sullivan calling on speaker mike johnson to bust through the politics in his caucus. chuck schumer, leading a congressional delegation to ukraine, looking to reassure president zelenskyy. ukraine marking two years since russia's invasion. president zelenskyy said 31,000 troops have died so far. annmarie: it's the first time we have heard him put numbers on the troops. what you heard from senate majority leader schumer is it is not enough in terms of what ukraine has on the battlefield right now. for them to continue, they need this u.s. aid. tomorrow is going to be a key day. resident biden has the top four lawmakers from the house and the senate coming over. o'connell, schumer, hakeem jeffries and speaker johnson. not just talking about this but

the government shutdown. we will read the tea leaves on how close they are to all of these. jonathan: the israeli prime minister, benjamin netanyahu, looking to ease tensions between his country and the united states. netanyahu said there will be a plan for civilians ahead of an expected assault in rafah. >> we are on the same page with the u.s. on this because that's how we do it. the reason you have that population in rafah is because we cleared them away from the other combat zones. that's why they are there. there is room for them to go north in the places where we have already finished fighting. jonathan: over one million civilians are believed to be sheltering. there is no deal for a possible pause in hamas fighting. norman joins us.

you saw the language used by benjamin netanyahu, saying they will have civilians flee ra fah. how difficult do you think that will be? >> it will be a challenging operation because of the large number of civilians. that city has 1.4 million civilians in it. it is a small geography. we are talking about 12 miles, the width of gaza at this point. the israelis are going to have to move the population to several areas. there is a place to the west. there is an area to the east and moving, as the prime minister stated, north into somewhat clear areas. the infrastructure is devastating. they will require a lot of humanitarian support. lisa: jake sullivan said we could see something -- annmarie: jake sullivan said we could see something more firm in the coming days paid that's not the impression i got from net yahoo!. how big -- netanyahu.

how big is the gap between them? >> currently, there is a general understanding of the contours for a hostage agreement between egypt, cutter, -- qatar, the unite states and israel. -- united states and israel. hamas has not yet accepted this. although there are reports hamas has lowered its previous demands, we don't have that confirmation yet from hamas. annmarie: on one hand, netanyahu is trying to evacuate the palestinians and planning the assault on rafah. on the other hand, he's dealing with potential hostage negotiations. which one is it going to be? >> it's a jew have to be both. the israelis cannot cease their -- it's going to have to be both. the israelis cannot cease their

operations. that is something the bulk of the israeli people leave in. at the same time, there is genuine impression -- pressure on the netanyahu government to release 134 hostage. -- hostage others. that's not going away, either. lisa: people are looking at the implications and looking at the red sea and noticing things are not changing. the attacks are continuing and ship routes are being changed on an ongoing basis. do you see any sense that there is going to be a shift to that or is this the new normal? >> this is the new normal for the foreseeable future. the united states and its partners have committed to defending ships from missile and drone attacks. when we have a sense of the threat within yemen itself to conduct a preemptive strike to avoid tax. this this not mean an end to -- does not mean an end to all

attacks. he saw a missile fired that missed a u.s. vessel. a missile struck a u.s. fertilizer ship, which is the first ship lost in this conflict. that ship remains listing in the area and could produce a considerable environmental disaster if it were to sing. -- sink. we are sending tugboats to that ship to get it to djibouti. unless certain demands are met, they will not allow the ship to be evacuated. lisa: what's the purpose of the attacks we have seen by the u.s. and allies against houthi? what is the purpose of them? >> it degrades houthi capabilities. it has degraded the long-term offensive capabilities of the who these. -- who the -- houthi.

the problem is we are not achieving the normal of what's going on. that is tremendous consequences for egypt. we are going to have to hope a cease-fire in gaza will take away energy for these attacks. i'm not convinced. jonathan: thank you. the former senior u.s. intelligence official on the latest in the middle east. the new normal is expensive. second busiest january on record. the record was coming out of the pandemic. we are getting those kinds of numbers because of the disruption you see at the panama canal, because of the water levels and because of this in the middle east. >> you said it's expensive. but for who? it's not necessarily the united states. this is much more for europe. at what point will that be an increasing concern for european companies in a way the u.s. is

not feeling? annmarie: the british chamber of commerce has come out and said this is affecting half of u.k. exports -- more than half of u.k. exports. this is a big issue for european goods. less so for the oil tankers. you have a tremendous amount of u.s. oil. but these goods, goods inflation is something to watch. jonathan: let's get you an update on stories elsewhere. >> a powerful charles koch backed network announced it will no longer fund nikki haley's presidential campaign. it is a major reversal. they have thrown their weight toward nikki haley as an alternative to donald trump. nikki haley was defeated in south carolina with a 21 point loss to trump trade she has vowed to stay in the race until super tuesday on march 5. goldman sachs has a $1 billion private credit deal with m

ubadala. they said we want to partner up with investors who have asian exposure and they want to go with experience and a track record. at&t will receive a five dollar billing credit after last week's wireless outage. five dollars is the average cost of a days's worth of service. at&t blamed an incorrect process while it was expanding its wireless network. that is your bloomberg brief. jonathan: i'm excited about my five dollar credit. i'm going to leave that there. up next, the fed's preferred inflation measure on deck. >> if i was a central banker, i would be aiming at a long journey back to 2%. i would not rush. jonathan: the bumpy road to 2%, up next. ♪

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jonathan: stocks on the s&p 500, just about unchanged. we are down by 0.03%. u.s. 10 year yield started at 4.2461. >> if i was a central banker, i would be aiming at a long journey back to 2%. i would not rush to get back to 2%. i think there is an over 55% probability that we can. that we can get to a stable inflation rate that is low enough and stable enough that it anchors inflation expectations without crushing the economy. jonathan: a slew of data this week with core pc due on thursday.

the second straight month of acceleration. a chief economist wrote while fed officials have begun the conversation of eventual rate reductions, the pathway to removing policy firming will be slow and tempered. on the economy, are we rolling over or accelerating? >> i think it is difficult to say. from an inflationary standpoint, the risk is to the upside with the latest data, far from convincing that we are on a sustainable pathway back to 2%. the fed raises rates in order to slow the economy. and arguably to break the consumer. what with the economy accelerating into the year-end and the consumer still very resilient, it's not yet clear that the fed has done enough to ensure that the u.s. economy gets back to a place of price stability. jonathan: when you say done enough, do you mean they need to go higher or hold where we are for even longer? lindsey: i would argue that the

fed does need to raise rates higher. but at this point, the committee has capitulated that 5.5% is the terminal level. that is sufficiently restrictive, according to their models. i do think at this point, the fed is more likely to simply remain on the sidelines, keeping rates higher for longer, rather than re-engaging in further rate hikes. i'm not convinced that this is the right level for the fed funds rate in order to get us back and ensure that we get back to price stability. lisa: what are you looking at in particular? this goes against other people who say there is weakness, it is coming. we just haven't quite seen it yet. lindsey: we are seeing a loss of momentum, certainly. when we look at 3.3% gdp, well above expectations in terms of year-end growth that is a loss from the near 5% acceleration in the third quarter.

personal consumption expenditures are down slightly. when we look at the momentum of business expenditures, also beginning to slow. looking out to 2024, that does not necessarily mean we will see a material slowdown or force the economy into recessional territory. slower growth or loss of momentum, absolutely. but we are looking for a maintenance of around 2% gdp over the course of 2024. lisa: one thing investors are pointing to -- a model came out expecting they expect to see a large quarter over quarter increase in credit card delinquencies that brings us to nine consecutive increases, six more than the previous record. people are saying this is the early sign of stress that will show up in consumer and data. do you agree? lindsey: we have seen an uptick in dealing with these.

it's not that households aren't feeling the pressure of higher borrowing costs and prices, the resumption of student loan payments. absolutely, they are. we are also seeing some organic offsets to that pressure and the loss of more recent fiscal stimulus and pandemic savings because we are starting to see decent gains in wages. real wages turned positive at the start of last year and that is continuing to gain momentum as we move further into 2024. the consumer is under pressure, absolutely. they are turning to credit cards. we have an outstanding balance of over $1.1 trillion. you have to put that in the context of the household balance sheet. during the pandemic, we were not just buying palatines, we were paying down credit card debt -- pelotons, we were paying down credit card debt. the balance sheet has additional wiggle room. we can continue to grow the liability side of the household balance sheet for some time longer before becomes that traditional red flag.

we are seeing some pressure but there is resilience for the consumer to continue. jonathan: you believe the space for the consumer to lever up. are we underestimating the potential for the u.s. growth this year? lindsey: i don't necessarily think so. there is still that second derivative decline. that loss of momentum. when we look at the consumer, still able to take on new amounts of debt, but under pressure of higher prices, higher borrowing costs, that translates into still positive but a loss of momentum from what we saw earlier. that looks like about a two to 2.5% average growth rate over the next 12-18 months. jonathan: i want your thoughts on the policy conversation, the discussions set to take place at the march meeting. chairman powell flagged it, it will be on the balance sheet and qt. what do you think that informs the decision on what to do? lindsey: the fed is beginning to

open the door for a change in policy. not only are they shifting it further for eventual rate cuts, but they said they will start with the conversation about the conversation for ending qt or at least revising qt. all of that is going to depend on the evolution of the data. the fed is in no rush to remove the firming, the policy firming that they have put in place over the past two years. unless the data comes in extremely convincing, unless the data comes in showing that acceleration in disinflation, i think the conversation not only for rate cuts, but for the balance sheet, is going to be just that, a conversation without much action taking place until the second half of the year. annmarie: how concerned are you about a long-term government shutdown impacting economic growth? i say this not just because of the government shutdown that could take place but also for moody's. lindsey: i think we have seen

this story play out before. the biggest story will be on confidence. i don't think it will be enough to move the needle in terms of topline growth, nor is it enough to significantly move the needle in terms of the longer run pathway the fed intends to be on in terms of adjusting policy. in the near term, absolutely. the ongoing shenanigans in washington certainly play on confidence. could lead to an additional downgrade and undermines the confidence the international market has in terms of looking at the u.s. market as a flight to safety trade, equality trade as we have seen before. again, the storyline has played out. lisa: we get $63 billion of two-year notes sold today. we have $42 billion of seven your notes tomorrow. -- lindsey: it's interesting,

because we seemed to have somewhat of a wake-up call in october. the 10 year skyrocketed to near 5% grade once the fed began the notion of potentially cutting rates, concern fell to the wayside. deficits do matter. debt does matter as it will continue to beget more debt and readjust the markets longer-term expectation for rates or at least provide a floor. particularly to longer-term rates as treasury issuance is expected to increase between 23% to 25% up and down the curve, in order to finance this bloated government spending. again, i would argue that we should have seen a reaction in the market long ago. but for some reason, investors at this point, are still very focused on the notion that the fed is going to initiate the process of rate cuts and when they do, that process is going

to be quite accelerated, bringing us down to much easier level of credit conditions. i think the market, as we have seen before, has been wrong in terms of their timing for the fed to end rate hikes and is again going to be correct in their assessment of not only the timing of the first rate cut but that more tempered process on the way down. jonathan: interesting. i want to go through those numbers that lisa ran through again. 63 billion dollars of two-year notes. $64 billion of five-year notes tomorrow. -- five-year notes. 72 billion in seven year notes tomorrow. lisa: it starts to test the appetite of people who have soaked up this debt so far this year. i don't know. jonathan: coming up in the next hour, michael, ed mills and

subadra. this is bloomberg. ♪

>> the marker has not been sensitive to what the fed has done. >> at this stage of the game, like the fed, we are waiting for more data to assess what they are thinking. >> what is the rush? >> the longer these policy rates stay elevated, the more they are going to buy into the economy. >> this is bloomberg surveillance with jonathan

ferro, lisa abramowicz and annmarie hordern. jonathan: this is bloomberg surveillance. alongside lisa abramowicz and annmarie hordern, i'm jonathan ferro. the s&p 500, just about unchanged after friday's session. lots to talk about nvidia, not much to say about jobless claims, they are in at around 200 k. for the fourth week, two year yields climbed higher. just short of 470. jobless claims will be a bigger conversation this week. lisa: you raise a fascinating implicit question, which is why are stockmarkets not responding more to the apparent strength in the u.s. economy that is inflationary? if you truly have that, do you have re-inflation? maybe not. but do you have stickier inflation that changes policy over a longer term? that's the question and the ramification is unclear. jonathan: you can make the argument the index is not responding because it is insulating by one single name, nvidia.

those rates are hurting from what's happening at the front end of the curve. lisa: we can't talk about any sectors of monolith. you have cruise liners that are crushing it. you have other kinds of consumer discretionary companies who are hammering home incredible results and regional banks are getting crushed. they are more indebted and have that sensitivity. it's a tough market right now. it's hard to sound smart. when people do try to sound smart, they get blown out of the water. jonathan: you can be right or sound smart for the second time this morning. icon of the seas, how much is icon of the seas? that boat is ridiculous. lisa: maybe they will offer free rides to get deposits. last week, we found out they need to attract the money icon of the seas just minced. jonathan: i will take up five

dollars from at&t and push it over to a regional lender. [laughter] lisa: so many levels. are you excited about that five dollar rebate? jonathan: i think it's expensive for them, it will make a lot of difference for a lot of people. lisa: exactly. processing malfunction, what does that mean? annmarie: it will cost them almost $400,000. jonathan: it's going to cost a lot more than that. annmarie: when they tried to figure out what the problem was and make sure that their infrastructure -- jonathan: i wonder if you call them directly if you could get $10 or $15 if you call and complain. i think if you call directly, you can do better than the first stuff. lisa: join "surveillance" tomorrow. jonathan: i wanted to mention these numbers. lisa has mentioned them a few

times. 10-year note's coming later. tomorrow, seven year. that auction, $42 billion worth. we talk a lot about dysfunction in d.c., they are good at one thing. increasing the debt by a lot. annmarie: we will see more of that this week. there will be a big meeting at the white house. they have to talk about two things. the ukraine aid. there is a potential government shutdown, a partial shutdown. the agencies are split up. the big one would be march 8. moody's at the moment, the only major agency that has a tripling credit rate. remember what they said in the fall. we are putting it on the watchlist because of the

applicable polarization. does that come into focus this week? jonathan: the s&p 500, negative by not even .1%. the 10 year bond yield is 4.2461 . coming up, michael, ed mills and subadra. we begin with our top story this hour, stocks inching back from nvidia powered all-time highs. michael writing this. the index has become very sensitive to the performance of nvidia, the poster child of the ai revolution. and this strikes us as a late cycle phenomenon in which all the attention becomes focused on a sliver of the market. michael is with us around the table. some people think this is just getting started. you think it's about to end? >> i think the technology is just getting started. it's a late 1990's type market

where we are excited about the future and a limited number of companies can represent that future. i not the -- i am not the on the person who looks at nvidia and is reminded of cisco in the late 1990's. that was the beginning of the internet revolution. people did not overestimate the importance -- how important the internet was going to be. jonathan: a lot of people would turn around and say there is a big difference. customers are minting money as well. you have five customers or the biggest companies on the planet who make up about 40% of the revenue for nvidia. they are real customers who make real money, paying for products from nvidia and nvidia is minting money as well. this profit growth has been extraordinary. isn't that a key differentiate and factor between now and back then? michael: yes, i think it is somewhat different and yet human behavior does not change that

much over 30 years or so. i don't think we are better at staying calm and rational in the face of just incredibly exciting change then we were 30 years ago. it's not 1999. you don't have this salute of .com companies where you can count the number of days of cash flow they have. this is a very serious, remarkably powerful change we have ahead of us. markets have never really been great at keeping their feet on the ground in times like these. lisa: i want to get into the nitty-gritty because, honestly, i'm trying to read more about nvidia actually does rather than just say nvidia and everybody cheers. the inferencing trips versus some of the training chips, i'm just wondering what gives you pause? are you outright selling nvidia or are you saying you can't take the rest of the market as far as some people expect? michael: as i say, i think the

way we get very excited about a small part of the market, it is a sign that, at the very least, the secret is out there. it's heavily invested in and you at least have to be cautious. i wouldn't think of short selling nvidia. that strikes me as a difficult thing to do. but, i can't think of a company which is as dominant as nvidia is today, keeping that dominance for a long period of time. >> what's the playbook for late cycle where you think there are similarities to the late 1990's? michael: i think the overall market is still ok. i think the economy is still ok. there are things i like about what's going on, particularly in global markets. we should be a little bit excited about japan, which has made its way to a all-time high. i didn't think it would make it to an all-time high but i thought we would be talking about it. what's remarkable is japan has gotten to an all-time high since

1989, i can even do the math. in 34 years. -- can't even do the math, in 34 years. that excites me a little bit. i give credit to people who understood what nvidia was going to be 18 months ago. by the point that we get to, -- i knew it was going to be ok. but that level of everybody is stopping and watching and that's going to determine what the market is going to do over the next 24-48 hours, it was a little bit abnormal. i've seen it before and we will see it again. that's not what happens at the beginning of the story. i don't think we are at the beginning of the ai revolution as far as the next three years and market returns are concerned. jonathan: they are up 8% this month.

when you look at what's happening on the ground in japan with negative gdp, this is a disconnect for some people at least. gdp is negative in japan and we have the equity market at an all-time high in germany. how relevant is growth around the world to what's happening in equities around the world? michael: i don't think gdp and corporate profitability are the same thing. corporations in japan are doing ok. there was a revolution that started a little more than a decade ago. i remember being in japan in 2014 and saying to people there that i felt this would be the beginning of a bull market. it would take the nikkei to the all-time high. i didn't think it would happen quickly. i thought it would happen before 10 years. i think japan is in a corporate revolution. i think there corporate sector is much more fairly valued than our corporate sector.

i don't think gdp is completely irrelevant but it's never been a useful metric for making investments. annmarie: is part of this because you see companies moving to japan like tsmc? michael: i think, yes, absolutely, to the extent you have an asian mandate, i think japan has taken flows away from china. that particular trait has gone too far. think the -- trade has gone too far. i think the japanese corporate sector has been underestimated. what i would have expected was a rush of money taking the nikkei to an all-time high. what we see is a reflexive oh my god, it's up 39,000, i never thought that was possible. it's up 18% or something today? now, you are seeing some money coming in. yes, maybe that monday takes it

too far. it is remarkable, what is still one of the world's key global indexes is one of the world's key economies and can make its way to a generational high with so little excitement and so little conversation. lisa: just to zoom out, are you basically saying that we are not going to see a massive bust like the 20 20's -- 2000 dotcom bust but we might see the u.s. underperform some of these other areas as tech taste a less front and center -- takes a less front and center kind of role? michael: i don't see the u.s. market falling apart right now. we are forming a very overvalued , very narrow and, in the end, dangerous market. jonathan: nikkei, up 17% today. isn't that amazing? 17% higher yield today. lisa: especially given the fact

you have had the currency underperform and people are wondering what's going to happen with the bank of japan policy and they are not necessarily going on a currency had spaces but there has been incredible enthusiasm around japan. we just talked about it a little bit. >> a little bit. jonathan: let's get an update on stories elsewhere. here is your bloomberg brief with dani burger. >> kkr is nearing a deal to buy a software business from broadcom. the deal could be announced as soon as today. broadcom is selling its end-user computer unit which inherited through its vm ware acquisition. cathie wood cells into nvidia for the first time in more than two years. they sold more than 2000 shares of tsmc's nvidia.

ryanair has warned it could be forced to pay her back its schedule during peak summer due to delays in boeing jet deliveries. they may receive fewer than 4737 -- 40 737 max jets. the ceo warns it is likely to drive up european affairs this summer. jonathan: up next, nikki haley refusing to give up. >> there are huge numbers of voters in our republican primaries who are saying they want an alternative. i'm not giving up this fight when a majority of americans disapprove of both donald trump and joe biden. jonathan: that conversation, up next. live from new york, this is bloomberg. ♪

jonathan: live from new york city, the s&p 500, inching lower from an all-time high close on friday. the 10 year yield at 4.24. nikki haley refusing to give up. >> there are huge numbers of voters in our republican primaries who are saying they want an alternative. i'm not giving up this fight when a majority of americans disapprove of both donald trump and joe biden. we are heading to michigan tomorrow. [cheers] and we are heading to the super tuesday states throughout next week. jonathan: nikki haley undeterred by a 20 point loss in her home state to donald trump.

we have seen -- ed trump writing we have seen trump pouncing elite in primary votes but haley has a commanding lead over biden in hypothetical matchups. look for polling in a three-way race. this is interesting given the exit polling in south carolina that shows 20% of republican voters say they will not support trump in the general election. ed mills joins us. we've been talking about the in game or nikki haley. what do you think it actually is? ed: it sounds increasingly like she could be trying out a third-party candidacy. a no labels party has ballot access in 50 states and they are looking for a candidate. her statements there sound like she is both running against donald trump and joe biden. we have not seen a lot polling details out in terms of how she would fare in a three-way race. i think there will be a it of a boom here, looking at the polling data. if it looks good, there will be a lot of pressure for her to

play that third-party candidacy out. annmarie: the koch brothers will not donate to her more financially. they will support her they will look to shore up republican senators and congressmen and women. she wants to take on a third-party approach. who's funding that? ed: there are lots of donors who have given to third-party organizations, such as no labels. the super pac is primarily funded by the koch brothers. when you look at the fact that nikki haley got 40% of the vote in south carolina, her home state, but only picked up three delegates to donald trump's 47 delegates, that taking a stock and making a potential pause here is just a recognition of reality. as we go forward, we have super tuesday, where pallets are cast on a -- ballots are cast on a

proportional basis. after that, almost all states go to winner take all trade as long as donald trump is able to get a majority of these votes, he will get 100% of the delegates and there is no path in that scenario unless nikki haley is actually able to get above 50%. if you can't get any in your homestay, it's very far to get it outside of your homestay. annmarie: trump is at 60%, close to the 50% than 100%. if biden was only winning by 60%, people would be freaking out. what does this say for the president -- former president ahead of no member -- november? ed: 60% is the high watermark rate he was at 51% in iowa and 54% in new hampshire. when we look at previous presidential elections, when you have an incumbent, donald trump

is not an incumbent but the closest thing we have had since 1875 were a former president has run for reelection after losing the previous election, if you are not getting those high 80 to 90%, that shows a lack of enthusiasm among the base. joe biden got 96% of the vote in south carolina in a primary a couple of weeks ago. comparisons, it is some alarm bells for who is going to show up in november. i think it is a reflection that we see a lot of polling data that the majority of americans don't want this matchup but this matchup is going to be close and probably won by the group that does not like either candidate but can win over the group that does not like either of them. lisa: how excited are you to talk abut this for the next five months? ed: i like to talk about policy. i think we have a government shutdown coming at the end of this week. huge policy implications on a

defense bill, a tax bill looming out there. it's part of the job. the d.c. one takes over the other at various points in the year. lisa: if you like policy, i'm with you, i don't know that i hide it that well but it's not that thrilling for me to talk about this matchup that nobody wants to see. why are we not talking about why we have the situation to start with? isn't this an indictment on the primary system we have? ed: i think that will be litigated. what we have seen in the past is when we have gone through the primary cycle and we produced outcomes that the voters in the party don't like, that's when the system gets changed. after disastrous -- the disastrous convention in 1968 for democrats, that is why they have superdelegates. though superdelegates are still out there today. if something needs to happen from the chicago convention in 2024, the history repeats itself, where the superdelegates

can make a change if they want to. republicans can still make a change if they want to, going into the convention. it's just unlikely at this point. jonathan: when you say if something needs to happen, what do you mean, ed? ed: we have the two oldest candidates in the united states history running for president. one of them has multiple felony charges against him. there is a lot of uncertainty, in terms of what is the final result of this race, especially since it is so close. i'm in this camp where we think we know what's happening but are there some unknown unknown out there that's going to fundamentally change this race? i wouldn't be shocked. obviously, i would be surprised. but this is not a race that seems fully settled to most of the people that i talked to, when i talk to clients at

raymond james and our financial advisors. there is a sense out there that something could happen that upends this race. that's what i'm talking about. jonathan: appreciate it. ed mills of raymond james. i'm not sure if that is a sentiment of hope that maybe things change. lisa: jamie dimon is not going to be running an oprah winfrey is not going to be running. it's going to be trump versus biden. stop with the speculation and yet i can't. jonathan: gdp does not seem to matter to places like japan. does politics matter stateside? michael: no. not in february and march. i think everybody is scratching their heads and wondering how we got here, that we can have this race twice. i don't think the fact that trump will run against biden in november is going to derail the market. annmarie: you don't think it

will derail the market if trump becomes president, are you -- do you start preparing for the policy shifts? michael: not yet. i think if there is questions as to what sort of a government he is actually going to lead if he gets in. i didn't say i thought trump would win, i set i thought it would be trump against biden in november. i'm not sure who actually wins. i think what we have seen is nobody space is very excited -- nobody's base is very excited, you're going to be voting against somebody rather than voting for somebody this november, which is different. it's too early to start shifting the portfolio around different policies. we have some idea of what a trump administration would look like. the same people he dragged into his administration last time around did not do so well. jonathan: michael, thank you. the person of choice, i think it

will be interesting if it is trump volume two, who's coming on board? lisa: there are very different camps in his camp as far as people who have experience in the business world and who are not ideologues and those who are. we shall see. jonathan: the rex tillerson's of this world, are they going to come back for more? lisa: they will flirt with it. jonathan: chinese stocks pulling back after a strong rally. equity futures slightly negative on the s&p 500. this is bloomberg. ♪

jonathan: stocks inching lower on the s&p. the nasdaq, just about unchanged. focus on the bond market, two-year, 10 year, 30 year. yields just about unchanged.

we will keep going through some of the economic data for you this week and we will talk about some of the supply coming from the treasury as well. $63 billion into your notes today -- in two-year notes today. lisa: this is a lot of money. we are talking hundred $50 million in sales. just u.s. treasury issuance at a time where either candidate who wins the rematch we had in 2020 is going to basically increase the deficit. this raises the question, when do higher yields become a tailwind or a headwind to markets that seem immune to anything that does not rhyme with nvidia? jonathan: does that raise the ceiling for potentially high yields from here? typically it causes pain somewhere else and you have the vid coming back in but it hasn't happened so far. annmarie: billy thing that will

curtail this is that this is ok and not that tight, believing that could change that narrative is true weakness and we are not seeing that. you are not seeing week this, maybe people start to realize risk assets can keep rallying because this isn't that type in any case. it is the real threshold for me. when we start to see these conditions are not restrictive, we just haven't seen the pain yet? jonathan: our next guest joining us in about 15 minutes on why she still thinks this treasury market might be a buy the debt market. the euro is positive against the dollar by about a third of 1%. a busy week of u.s. economic data on deck, new home sales kicking things off with the key data point, course ep inflation data will be released on thursday. the bloomberg survey calling for a jump on the heels of a heart to than expected january. we should sit on claims again.

exceptionally low on thursday and we were discussing nvidia for obvious reasons but still exceptionally low. lisa: people are ignoring the fact that the labor market is not cracking and inflation is not fading as quickly as expected and we have seen an underwater -- and otherwise -- how do you square that with the linchpin of the rally that we saw at the end of last year? some of it is squaring but some people are moving up. jonathan: talking about whether the fed should set policy for nvidia earnings. bigger picture, it is ultimately a lot of spending happening right now with some big calls about a productivity boost. lisa: there is the hopes and dreams of a new labor market on the heels of our -- of artificial intelligence. nvidia embodies everything, it is the holy grail of the equity market and the labor market and a portfolio manager.

-- said this reminds me of the late 1990's, anyone who tries to move away from that is going to get slammed with underperformance. it is a difficult moment. jonathan: d.c. is a constant stream of reality checks. here is the latest from senate majority leader, chuck schumer, warning of a looming government shutdown. some government agencies are only funded through the start of march with the remainder facing a march 8 deadline. minority leader mitch mcconnell and speaker mike johnson about the policymakers set to make -- set to meet with president biden in a bid to avoid the shutdown. can we avoid that government shutdown? annmarie: the president will be in new york today. be careful if you are taking cabs. what comes out of that meeting will be twofold. we'll get an update on potentially a government shutdown a partial one because it is only some agencies that would lose funding march 1. the remainder come march 8 and then what happens to that foreign aid is stalled, speaker

schumer made a huge push for that over the weekend, traveling with a congressional delegation to ukraine but so far, speaker johnson does not want to take up that vote on the floor. jonathan: what kind does he arrive in new york? annmarie: sometime this morning. jonathan: that's all i want to know. if the former president would come to town, gridlock. annmarie: he's going to land in queens and then take a helicopter downtown. jonathan: just a in queens. -- just stay in queens. annmarie: are people like jonathan ferro could take the subway dashboard people like jonathan ferro -- or people like jonathan ferro could take the subway. jonathan: really important story for at&t customers, affected last -- effective by the outage. they will be issued a five dollar credit on their wireless accounts. hundreds of thousands of customers were left without service due to an outage that the company says was because of

a -- hardly anybody is taking anybody -- is taking that on face value. what was that? lisa: incorrect processing procedure doesn't mean anything. this does not compute with why he should have an outage from 9:00 to 3:00 and by the way, if they're going to offer five dollars per person, they are paying millions of dollars to their subscribers. shouldn't they invest that in making their processing changes more efficient customer -- more efficient? annmarie: people are furious the people might call and say i need more than five dollars, not even able to call 911 that morning but to the point about this processing error, it continues to remind me of when someone comes to your computer and says did you turn it off and turn it on again? the u.s. government is looking at whether this was a cyberattack. jonathan: that is the query we

all have. what was it really? china, stocks pulling back after a strong rally following the lunar new year. closing down 1%, snapping a nine-day winning streak, the best run since 2018. the index now positive on the year. chief emerging markets credit strategist at bloomberg intelligence joins us around the table. when ever -- whatever people say it is uninvestable, that is when you take a look at it. is that when it is a trade and not investment? >> it is definitely a trade but it depends on if it is part of the china market you want to invest in. bonds are still a great buy. look, if you believe the pboc is going to continue, -- you're talking about equities and

equities most certainly are a trade. if you look at momentum, maybe you want to time the bond and by the depth but from an investment perspective, i stand by the fact that it really is investable. >> you mentioned chinese government bonds. the difference between what is happening with chinese government bonds this year and what is happening with treasuries, the data has been decent. yields in america are priced higher. if you are worried china is going to pick up sometime soon, is that the message that bond market is telling you? >> that's a great question. we are talking about why risk assets, because the dollar, the dollar bulls have not gotten their bullish move yet. with the fact that officials are basically able to manage it. -- allows cvg to deliver a

positive return on dollar terms. that is one of the real forces that is holding back assets, the fact that the dollars not living up to the bullish streams that a lot of people thought it would with rates kind of backing up in the u.s. lisa: what does it say about sentiment if people say if everyone else is saying it is not investable, let's go? does that tell you to has reached a certain threshold? >> people would have you look at the data and pmi's which are trending higher globally and if you look at emf, that tracks well with where they are going but it hasn't done that yet this year. even the em kerry currencies, they haven't really held up as well as one would expect. you see no finally, central banks across the em landscape starting to cut. that is just a precursor of what is happening, this higher interest rate regime we are in

that rates are compressing, is now the time to back out of your bullish non-dollar trades or investments? i don't know if that is the answer yet but for the most part, it is probably wise to play for a little to dollar strength. i think that is going to continue for the next three to six months. let's talk about taylor swift and singapore. lisa: i still want to talk about china. a lot of people are trying to figure out, rate differentials, risk-taking, etc.. why is it that the bloomberg commodity index has reached its lowest level going back to 2021? why is everyone has been hoping and dreaming for some sort of stimulus package from china that has not materialized though they have flirted with it and given some rhetoric to that effect? why are we not seeing the

resurgence we are seeing on the margins with some of the data? >> some of the money being raised in china is being used to pay off debt, not invest in new projects. you are not seeing that demand for exports from brazil. we are hoping that will change. -- imports to decelerate export, that should be good. it should be a sign of bullish momentum into tech stocks globally and then taiwan, taiwan has -- they're treated is excited to pick up in january as well. there should be a little bit of noise but things are improving at the margin and if you look at asia, it is really one of those countercyclical plays because as the global growth picture improves, --

lisa: do you think -- annmarie: do you think the worst is behind the way the u.s. conducts trade relations with china? >> one of the reasons the dollar is trading is because of the tariff premium which is being baked in because of a potential trump reelection. but is something that all eyes are on. you debate this. lisa: not much has changed. >> i think it is the market's perception of it. the market coming to grips with the fact that the tariffs are going to get a bit more on china and things are going to get tighter globally from a trade perspective and the outlook now is another, we will see current account balances and it is all pointing to the fact that you see this swapping out of china into these other markets and these markets have not yet felt the benefit in terms of their

asset prices rallying but the economies are improving and that is what we are looking at. jonathan: good to see you, great to catch up. equities right now the s&p 500, down about 0.1% on the s&p. lisa: he is really smart on china. he had that brilliance that came out after they gave me a sense of why we are not seeing that dominance in the economy because it is all going to pay back debt. jonathan: thank you. let's get an update on stories elsewhere. here is your bloomberg brief with dani burger. dani: britain's top antitrust enforcer has opened in -- open an investigation. the competition and market's authority has opened a cartel investigation into the company's, alleging they may have traded sensitive information. an initial information gathering

statement will take place until's -- until december. disney is said to have signed a binding packed merger of operations in india. sources tell bloomberg that affiliates are respected to own 61% in the new entity with disney holding the rest. the new business is said to make a formidable media giant in one of the world's fastest-growing markets. disney has struggled to retain markets in india in recent years. -- has sold shares for the first time in more than two years. her technology and robotics etf sold almost 8600 shares in taiwan's largest company on friday. it also soared more than 2000 shares of the key customer, nvidia. -- artificial intelligence frenzies intensify. that is your bloomberg brief. jonathan: up next, bond traders bracing for a busy week ahead. >> we still believe we will have

lower yields by the end of the year. we think because of the selloff, this makes a great buying opportunity. jonathan: that conversation just around the corner. hey, david! ready to get started? work with advisors who create a plan with you, and help you find the right investments. so great getting to know you, let's take a look at your new investment plan. ok, great! this should have you moving in the right direction. thanks jen. get ongoing advice; and manage your investments in the chase mobile app. get your business online in minutes with the power of ai... ...with a perfect name, a great logo, and a beautiful website. just start with a domain, a few clicks, and you're in business. make now the future at godaddy.com/airo

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xi-chun, xi-chun, xi-chun! you've got more options than you know. book now. jonathan: live from new york city, equities pulling back about a 10th of 1% on the s&p 500, just a little softer after all of the excitement of last week and the all-time highs that we saw after close after close. yields a little bit lower this morning, down a basis point. 4.2323 on the 10 year. bracing for a big week ahead. >> there are going to be buyers.

we still believe that, we still believe we will have lower yields by the end of the year and we think because of the selloff, this makes a great buying opportunity. from a valuation perspective, compared to 2023, the thing i would like to see is valuations are not a timing tool. which is why we are tactically short heading into the options. jonathan: yields retreating from year to date highs ahead of options leader today. -- of socgen writing that as the narrative hits a speedbump, the feds data-dependent approach likely implies a gradual policy easing path and a higher terminal rate. the longer the fed keeps policy elevated, the greater the impact will be on the broader economy. we continue to believe that risks to yields are biased to the downside. great to see you. why is this still a buy the debt

bond market for you? >> we are at the end of the cycle in the market is not going to challenge the fed like they did last year, august, september of last year. we saw the selloff, year -- yields rose dramatically and this is a very different time frame. the fed is telling us that they are going to cut rates three times and the markets are not willing to challenge. jonathan: equity markets are not hurting even though we have repriced rates higher. dozen that lift the potential for yields to go higher? usually, bond selloffs are self-limiting because the buying comes back in. we haven't seen that so far. does that lift the potential for yields to go up more? >> it doubly does -- it probably does. i think that is part of that narrative. financial conditions are easy.

the fed has its own financial conditions that they put out, that looks at the interest rate sensitivity of the economy, mortgage rates as well as a variety of other interest rate metrics they look at. and it shows that conditions even by that index is quite easy. that said, i think that the market, at least the front end of the treasury yield curve, the two-year is going to be priced into the path of the fed. i think the two-year is sufficiently priced in for a fed path that is quite benign for the next couple of years. lisa: can you give me a sense of why inflation will continue to go down? if we do have lose financial conditions, and signs of ongoing strength and the ability to spend money? >> that's a good question and that is the speedbump we hit in last week's data because of the fact that we saw that the

consumer broadly speaking is still extraordinarily resilient despite higher interest rates. spending has been robust. we don't normally see a path from here on, a steady decline in inflation. we will see this back and forth. the broader trend from here on, i think it was very gradual over the next several years. 2.5% course ep -- core pc is obtainable but maintaining is going to take longer. lisa: -- was talking about how the bond market is being pulled around by the tales. you have the fear of something happening, not the conviction that it will happen. geopolitical risk, unsustainable policy and runaway inflation. the left side brings us inflation and hard landing risks. it seems like deflation and hard landing risks aren't in the

cards we take a look at some of the data that has been coming in. yields are a whole lot higher. >> on the one side you do have the inflationary aspect. i think the higher the odds that we see a meaningful slowdown in growth, as well as a decline in pressures. that is a point that i think jefferson, by share of the fed made last week which is that the fed always responds when growth starts to decline. that is always in the back of the mind of investors is that even though inflation is a concern, with inflation having declined quite meaningfully over the last year, this is a decline -- if there is a declining growth, the fed is going to respond -- a decline in growth,

the fed is going to respond. jonathan: $63 billion in two-year notes. tomorrow, seven your notes, $42 billion. does supply matter anymore? >> it does but there is a lot of cash on the sidelines. the equity markets, it is at all-time highs. ig spreads are tight. this is a very good diversification for investors that are already heavily invested in these other asset classes. look at two-year yields in the context of year to date highs and it is a buying opportunity. that is where you will see this demand come into the bond market, regardless of what the fundamentals would see. lisa: what i'm hearing from you is the idea of the fed put is making it risk on the matter what happens in the actual economy. risk on when it comes to bonds,

riskier credit, but we see in the stock market. do you agree with that? >> that is how it has been playing out so far. i think you will start seeing the weakness in the data appear from here on. it does not look like it is materializing. you should start seeing some weakness in some of the data sectors. you see the liquid sees, you see retail sales sorting to come under a bit of -- starting to come under pressure. you will start to see the consumer kind under protest come under pressure with interest rates as high as they have been. jonathan: -- try to make the argument earlier to us that the consumer balance sheets are strong's -- are strong. do you agree with that? >> there might be space. to me, there are some investors who can and they have the bandwidth to do that, and then

you have the cohort of investors that are paying student loans, have these credit card delinquencies, seeing the liquid sees in auto loans that are going to come under pressure -- seeing delinquencies in auto loans that are going to come under pressure. lisa: do you -- annmarie: do you not buy then that january was seasonal? >> the longer interest rates stay high, you're going to see the pressure build up in sectors like housing and auto loans. you are seeing a decent amount of pressure already and easing of conditions because interest rates have come down, but broadly speaking, consumers are not able to buy homes like they did several years ago. the housing market is still under pressure. there is not enough supply and housing prices are still relatively high.

there are certain sectors coming under pressure but it is not broad-based in all sectors. think that will come over time with interest rates remaining high for longer. jonathan: it is the problem with you at the economy's people. >> the problem is they can't move. lisa: people were able to get 3% mortgages and they bought beautiful homes that they love and they've got no desire to move whatsoever and i just want to say that there was a holdings economy. jonathan: highly personal. good to see you. we will talk more after the commercial break. every time we talk about we market, look at claims. -- every time we talk about we this in the labor market, i look at claims. lisa: it is not just stimulus payments. levering up, sure but off 30 years look -- 30 years -- 30 year lows. jonathan: another round of

jobless claims about three days away. in the next hour. this is bloomberg. ♪ sophie says you've been a huge help. at ameriprise financial, more than 9 out of 10 of our clients are likely to recommend us. our neighbors, the garcía's, love working with you. because the advice we give is personalized, -hey, john reese, jr. -how's your father doing? to help reach your goals with confidence. my sister's told me so much about you. that's why it's more than advice worth listening to. it's advice worth talking about. ameriprise financial.

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>> we just come off a very strong earnings season for a lot of companies and that's why we started the year very strong. >> the tech center is strong and it looks like that will

continue. >> everyone who is short or un-invested is pulling in. >> it still matters a lot and is still telling us there is more positive momentum to go. >> this earnings story is real. it's real and if you don't buy it, you will be left behind. >> this is bloomberg surveillance with jonathan ferro, lisa abramowicz and annmarie hordern. jonathan: the third hour of bloomberg surveillance begins right now. live from new york city, good morning, good morning for our audience worldwide, this is bloomberg surveillance. the s&p 500 is -0.1%. the fed is in no rush to cut interest rates. governor waller says what's the rush, president kashkari says we are not there yet. not now is the message. lisa: they say we will wait and the bond market is getting the message and stockmarket say they don't really care. the market right now seems to be

caught between nvidia and the fed put. nvidia it will lift all boats and that seems to be this market. jonathan: how much space to they have to respond to a negative shock? i think this market is willing to look past the january data a little bit. get a repeat of the fed data which is february payrolls will be huge. it's not this friday but the following friday we get that data. we are exceptionally low thursday. lisa: that's the point of the morning which is essentially that all of this works as long as inflation is not sticky and as long as inflation keeps coming down and the weakness that potentially comes down is disinflationary. that's a big question. the immaculate disinflation has been the heels of commodity disinflation. it's been on the heels of year-over-year comparison figures that have been easier to

beat than later this year. jonathan: i think you are raising the most important question which is how relevant monetary policy is to markets. how relevant to -- is it to disinflation. you've got a sense that jay powell was not comfortable with what has developed over the last six months to say we are ready to move. lisa: it's goods disinflation and now it is coming back up. you are seeing some sort of sense that maybe we've hit some sort of trough in the disinflation and services spending keeps going up so these are the debates that are underpinning a market that otherwise is pretty sanguine right now. jonathan: let's start with your equity market. 90 minutes away from the opening bell and equity futures are pulling back by 0.1%. the euro is a little stronger. coming up this hour, jim beyonca talking about a disconnected market.

we are looking ahead to this week's inflation data and apples plans to expand its wearables business. we begin with our top story, stocks are pulling back from a record after this week's inflation data. jim beyonca says this -- jim beyonca joins us now. some people say that this market is just sensitive to the bond market because nvidia is producing real results and it makes up a bigger and larger chunk of this equity market. are you looking for a reality check down the road? >> yeah, ultimately a reality check will come.

nvidia is producing and it is concentrating the stock market and it is bringing it higher. at the other side of the equation, the economy is not breaking and the economy is moving forward and i would argue that the inflation rate is bottoming right now at around 3%. it won't really go much lower for the next several months. eventually, the stock market will have to realize that the competition of higher rates is going to be a reality. it's being told by everybody right now don't worry whether there will be a cut in march, there are cuts coming there are lower rates coming in the competition you had to deal with when you get away from the mag seven. the competition of higher interest rates will go away sometime this year. it's all ok. sometime this year, the reality will be that that will be very difficult to see those rates

come down if the economy stays strong and inflation stays sticky. jonathan: 12 months ago, the narrative shifted from soft lending to no landing at all and the following month, we have this stress and regional banks. it feels like a repeat of that conversation. data is good and people start to talk about no landing and they move away from soft landing. at some point, yields go high enough that it causes some pain and people start buying bonds again. where you see the pockets of stress emerging? what are you focused on now? >> i think you're right the old adage of wall street's rates go up until something breaks. i would argue that on the rates side, we haven't broken enough to do the damage everybody thinks. where does that come in? let's go back to the october highs, 5% on the 10-year note. we weathered that and were able to whether holding 5.5 on the funds rate since july without really breaking anything and

what got the rally going was the fed chairman in october and november and the treasury by shifting its mix of bills and bond issuance kicked off the rally and that rally changed at least in the last month or so especially with chairman powell saying he was in no hurry to cut rates going on 60 minutes to emphasize he was not ready to cut rates. i think rates have a ways to go up before they start to get to the hurting spot. i don't think it's really hurting housing. the think i'm focused on with housing is when do higher rates start to bring prices down? they brought sales down and i heard a lot of mortgage brokers and real estate agents complaining about low sales numbers but if home prices aren't coming down which means people being forced a homes -- to own homes are not forced to sell. lisa: are they keeping rates at five .5% to cause some

discomfort in the underlying economy? jonathan: we lost the connection with jim bianco. he didn't fall asleep. lisa: it wasn't that bad of a question. jonathan: we will get that connection back a little bit later. i thought u.s. the right question. are we truly sufficiently restrictive when you got unemployment at or percent for 24 munson jobless claims at 2.01. lisa: the fed's only measure is incredibly lose when they take into effective interest rate sensitive people with 3% mortgages creates interest rate sensitivity in the economy. are we sufficiently restrictive if you see expansion in certain sectors? jonathan: there are always multiple ways of looking at the same thing. it's called the market. he thinks this is a rational

exuberance and at some point the market has to pay attention to what is developing in the bond market which is a 50 basis point repricing at the front end of the curve. people believe lucina handoff from a fed driven market to analytics. tech is still delivering and printing money. lisa: when do earnings fall off as a result of restrictive policy? i think we've got jim back. jonathan: he didn't fall asleep. lisa: is that what you are thinking that we have to stay at 5% on the 10 year yield for a prolonged time for things to break? does the fed have to hike rates again? >> i don't think we are at the point where they have to hike rates. i was at the zero-to cut camp and i'm closer to the no cuts for right now. i think higher for longer is good enough. are we going to flip over like

larry summers has been talking about? the possibility we might have to see more rate hikes this year? i wouldn't rule it out but i would say the probability is less than 50% right now. i think the real thing we have to keep in mind is these level of rates aren't hurting much. they are not dragging the economy, they are not dragging earnings. if you look at inflation, you could argue that inflation is not really in the last mile mode on its way to 2%. i think it's almost done at least on a year-over-year basis going down and that is not what the fed is looking for right now. they are looking for 2% inflation and they are looking for signs that the economy is unmistakably week before they react by cutting rates. they are just not getting that right now. jonathan: you made this call coming into the new year. it's not like you are looking at recent data and saying inflation is bottoming out.

this is something we were looking for at the end of the year coming into this year. do you think we are finding a floor for inflation? where will it level out do you think it can climb from here to year end? >> i think it's leveling out right here. somewhere around 3% year-over-year cpi, a understand we are 3.1 doesn't give me war room. the numbers after february's number are very low. you drop from your going all you need is one or two tenths. gasoline prices have moved up in the february number was large but we've got higher gasoline prices to push it up as well. i've been one that's been arguing that the housing aspects of inflation, those numbers will state sticky and they will not come down as fast as everybody thinks. we saw january when rent jumped

0.6%. you are looking at potentially being in the high 2', low threes through the end of the summer with inflation. if that's what will happen, i cannot see the fed declaring victory at that point and cutting rates. they might not hike them but a market that was pricing in seven rate cuts a little over a month ago might be looking at none to one before the end of the year. that will come as a big surprise as it starts to understand. jonathan: we priced out four of them. you've gone from one side of the boat to the other without a splash. high yield spreads of gotten tighter but not wider. it's amazing. lisa: either the strength continues that supports risk for the fed will step in. the difference is maybe they will not step in as quickly as people think. jonathan: great to catch up.

he just pretend it was a technical connection. lisa: that was popular during the pandemic when people pretend that they froze so the teacher wouldn't call on them. jonathan: that's great. i love that. equity futures on the s&p 500 are totally unchanged. here's your bloomberg brief. dani: charles koch says they will not back nikki haley's campaign. she was defeated in her home state of south carolina over the weekend with a 20 point loss to trump. she has vowed to stay in the

race until super tuesday on march 5. goldman sachs has one $1 billion of a private credit deal. they plan to invest in the asia-pacific region with a focus on india. the head of direct lending at goldman said we want to partner with investors who have asia exposure and they want to go with a platform that has experience and track record. ryanair has warned that they will pare back due to boeing deliveries. they may receive less than 40 jets before the end of june. the airline wanted 57 originally between summer of 2023 and 2024. the ceo says aircraft shortages are likely to drive up european fares this summer. that's your bloomberg brief. jonathan: choice words from michael o'leary. up next, another shut down insights. >> i think we have a government

shutdown coming at the end of this week. huge policy implications on an events bill and a tax bill looming. d.c. takes one jonathan: over the other. jonathan:that conversation is up next. ♪ the future is not just going to happen. you have to make it. and if you want a successful business,

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jonathan: we are one hour at about 13 minutes away from the cash open in new york. stocks are pulling back by 0.3%. it's nice to have a quiet start in the equity market. lisa: you call that pulling back? jonathan: 1.5% lower.

another shut down this morning insights. >> i like to talk about policy and i think we have a government shutdown coming at the end of this week. huge policy implications on an events bill, tax bill looming out there so it's part of the job but d.c. one takes over the other at the start of this year. jonathan: congressional efforts to pull together a spending package falling flat ahead of friday's partial shutdown deadline. chuck schumer and mike johnson speaking past each other once again. president biden said to me congressional leaders to unlock foreign aid this week. how likely is it we get some form of government shutdown? >> i'm not a great oddsmaker when it comes to sports or

congress and policymaking. i will say that the risk looks higher with each passing day. we were expecting last night to see at least the contours of some sort of spending plan to come from mike johnson and his allies but it didn't land. the inability to deliver that was what from to chuck schumer to express his concern. it was late afternoon yesterday that schumer was pointing out that things were slowing down on the house republican side. mike johnson is facing a lot of pressure from the hardliners of his caucus were still pushing for a border deal and they want tougher border measures. they are now trying to look at these must pass spending bills which have to be completed by friday as a way to get what they want. annmarie: if there operating under a stopgap funding measure, it's a 1% cut across the board.

how many in the republican party want to drag this out to see that cut across the board starting after april 30? >> that's a great question. when you think about it, it would be something they would maybe want to run the clock out on and let snap into place. some of that funding trickles back to their districts and they may see things in services and activities that get cut back home. it's one of those things that sounds good in principle and yet when put into practice, it may deliver the kind of bite that they and their constituents are wary of. our teams on capitol hill have been asking this question. what is the endgame here? for the moment, they are playing the cards in front of them and they are trying to use the spending measure is a way to deal with the border but some may be thinking the long game as well, this automatic snap in of

spending cuts across the board. annmarie: does the contours of the negotiation change given the fact the president has invited the leaders to the white house? >> it adds a different element for sure. biden is also going to bring up the question of ukraine aid, something he asked for back in october and here we are in march. congress has yet to complete work on that package even as ukrainian forces are struggling to keep up against the russian invasion. biden also recognizes that the shutdown is something he needs to avoid as well. he doesn't want it to splash back on him. that is why he is bringing the leaders from both parties and the house and the senate in on tuesday to talk about this and try to reach some sort of breakthrough or understanding. house speaker mike johnson has indicated his willingness to cut a deal but as he said, his

negotiating and -- and leeway in terms of dealing with biden and the democrats is limited by the demands of his right flank and the threat they may come after him and his job. annmarie: it seems like he is dammed if he doesn't and if he doesn't. he has to work with democrats regardless at some point to keep the government open. at that point, he could potentially lose his job. however from own is has a been among him and his caucus? they say it's not going so well for him. >> it's been a rough go from the start. he took the job in the aftermath of another spending battle that cost house speaker kevin mccarthy his job. he had reached across the aisle and forced a compromise that prompted this so-called motion to vacate that allowed anyone member of the house republican caucus to call for a vote on

whether the speaker should be ousted. mccarthy lost and it took days and days of negotiation for the candidates to come up with mike johnson and now he finds himself in that same pickle. the tensions have not ease. what we've seen on capitol hill is they are growing more and more frustrated with mike johnson's inability to bring together this very narrow majority. they just lost the house see in new york in the special election a few weeks ago. that's further limiting his negotiations. annmarie: how difficult to these negotiations come as we get further along into the primary season? >> it's already here. i think the election already is weighing on this. former president trump has weighed in on the talks over the border. we saw him calling on republicans to scuttle the border-ukraine deal not too long ago.

we can look for him maybe to weigh in on whether they should try to do something to either force democrats hands by using the threat of a shut down. we will pay attention to how this plays out in the presidential campaign trail. jonathan: good to hear from you. we talk about this division in washington all the time between the republican party and the democrats with each individual party as well. yet there is a belief somewhere from policy analysts who believe we can pass aid for ukraine and do that sometime soon. annmarie: many are saying if you look at the numbers on a bipartisan basis and put it on a clean vote up or down, ukraine aid would pass. the issue is getting into the floor. and what that means for speaker johnson as he deals with the right flank and his party. lisa: i'm wondering how mike johnson will do this.

how will he not face the same fate as his predecessor and how can he wrangle this for people to make this their campaign slogans? jonathan: the margins are even smaller this time for him. annmarie: in new york three, they lost a seat and april 30, based on the deal biden did with former speaker mccarthy, there is a 1% cut across the board. how many fiscal conservatives are saying run out the clock until april 30, no deal and we get across -- a cut across the board and then you have the defense hawks in the republican party that says that will not be good for the defense budget. jonathan: s&p 500 futures are not changed. coming up next, why the fed will cut three times this year. here is the state of things right now. equities are going nowhere and

bonds are going nowhere in the two-year is south of 4.70. we got a lot of economic data this week and a lot of fed speak and it sound of treasury speak as well. lisa: to year and five year auctions as well today. tons of stuff coming to market. jonathan: it's real money. it's thought that deficit in that supply in those forces will reassert themselves as this year progresses. life from new york city this morning, good morning, this is bloomberg. ♪ how am i going to find a doctor when i'm hallucinating? what about zocdoc? so many options. yeah, and dr. xichun even takes your sketchy insurance. xi-chun, xi-chun, xi-chun! you've got more options than you know. book now.

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jonathan: good morning. consensus needs to wake up. there is language this morning of the upside of growth. recent data points to capex picking up. january is a fluky inflation month and the earnings outlook should improve. consensus needs to wake up is the ultimate message lisa:. which means the economy is doing great, maybe better than people expect area please explain how everything will continue to be that way. jonathan: looking forward to catching up with neil sometime soon.

equities on the s&p 500, on the nasdaq, positive by .1% in the s&p 500 is going nowhere. small caps were lower last week and we are down 0.4% this morning. regional banks have been tough in the equity market seems to be less sensitive to what's happening in the bond market. certain parts of the market do not like to see the two-year at 4.69. lisa: rates still matter and it relates to the economy and certain earnings. is there a broader kind of downshift and broader equities in response to higher yields if the consensus needs to wake up, wakes up in that strength gets baked into higher yields from here? jonathan: the 10 year is pretty sleepy so far this morning. the euro right now against the dollar is slightly stronger with

some dollar weakness over the last week. your top stories, warren buffett's favorite japanese trading houses are climbing after the berkshire hathaway ringing endorsement. he says the companies follow shareholder friendly policies that are superior to those practice in the u.s.. some of those banks are among those rising across the broader market today with gains at to the nikkei 25 region all-time high last week. the japanese yen call is interesting. this month alone, the nikkei is up 8% in year to date it's up about 17 percentage point which is amazing. if you believe we start to get interest rate hikes from the boj and incomes -- an income comes down, what does it mean for the street? lisa: it depends what you're finding currency is but potentially, if they hike rates and the end get stronger, it

could turbocharge things or undermine it if it means more weakness in the economy. people seem to be looking past that and saying this economy it's whether the japanese economy is breaking out. jonathan: some of those banks have rates higher and they haven't had that for a long time. lisa: that could benefit them quite dramatically. jonathan: it's amazing. neil dutta is booked on the show thursday. let's get you some of the names. jp morgan is announcing to co-heads to lead its global banking. they are consolidating to better align their coverage of clients as they grow in size and complexity. a couple of movements there to help meet the asia and european business as well. lisa: when i saw the redhead,

thought will this represent the new leadership ranks that could replace jamie dimon someday if he ever leaves? philippe agourri was coming from asia-pacific and he was talking about india being an important driver. is this a big shift or is this more important? you wonder the intrigue of the changing of the guards. jonathan: it's quite a move for city catch, quite a catch. it's pretty impressive they pulled someone avoid -- someone away. lisa: how much is the leadership ranks have been difficult to pull away. at citigroup, there is a shakeup going on in its new leadership in a new kind of feeling of a recording -- of a reorganization.

how much is that a war for certain talent? jonathan: slow economic data this week including the fed's preferred inflation gauge, the pce deflator on thursday. it marks the second straight acceleration for gains that's mostly been receding the last couple of years. data includes durable goods and weekly jobless claims and consumer sentiment. mark genomi says this -- >> good morning.

jonathan: are we going to get the gradual moderation in inflation this week? >> i don't think it will be this week. we see an increase of 0.4% so that will be an existential reaction to compared to recent months. going forward, we expect the trend down broadly with inflation measures coming down. pce inflation has been particularly low over the past six months or so until december. it averaged 1.9% annualized. we think this will move up a little bit so firm on the pce for the overall patient trend is different. jonathan: how big is the spread right now between pce and cpi? >> the spread is over 100 basis points. that's for the six-month annualized. this is an unusually large

spreads we expect that to gradually come down as some of the pressures we see on cpi are moderating. on the pce, we see some component firming a little bit we expect the spreads to gradually come down. lisa: what gives you confidence this disinflation is not transitory. basically will we get some stickiness of the view of 3% and that will be the bottom of inflation before climbs back up? >> i don't think 3% will be the bottom of inflation because the fed will not accept that. if it stated 3%, we will look for rates to stay for a long time. they could go up so i don't think 3% is an option here. what we will see is some gradual moderation inactivity particularly the drivers of activity that have been consumption in the strength and demand on consumer consumption.

with the rates remaining elevated for some time, we think consumption will gradually slow down and that will give way to price pressures. lisa: when do you start to rethink rate cuts this year? >> if and when we see the inflation stalling at around 3%. it pce inflation goes up like after the month of january, we see some further acceleration there and we see the cpi inflation not coming down from where it is, it annualized is around 3.4%. if that remains as strong as that and does not change, i think rate hikes could be on the table. lisa: do you think were benchmark rates are right now that conditions truly are restrictive if we are not seeing that weakness? >> the fed says they think they are very restrictive. i believe they are restrictive but not very restrictive.

if you think about the natural rate of interest that would bring the economy back to full employment and maybe with inflation in line with his target that the natural rate of interest would be around 5%. that means 2.5% real rates in the short term and 2.5% inflation expectation. a fed funds rate at 5.25 percent is restrictive but not particularly restrictive. we expect this natural rate to gradually come down in coming quarters as the economy slows and we expect the inflation as well to move gradually down as well. longer-term, we would be closer to 3% but we think policy currently is somewhat restrictive but not particularly restrictive. jonathan: what is the real world for that? what is the greatest piece of evidence that they are not restrictive? >> consumption is very strong.

one source of strength here for consumption is the persistent feedback we've seen between a very tight labor market that keeps generating jobs every month and keeps generating income every month and income fuels consumption. consumers turn around and services and keeping pressure on labor and prices. we think the feedback loop continues. it will eventually slow but that suggests that policy is somewhat restrictive but the fact that this is not really crushed them market, that number is not particularly restrictive. jonathan: are >> >> they sufficiently restrictive? it depends. if you are patient, you think inflation can come down within the next few years toward 2%, you can say mildly restrictive. eventually you will get there. if you want to get there sooner

or people will revise inflation expectations, then you may look at it as more restrictive. jonathan: we appreciate it. trying to catch up with this -- another upgrade on the s&p 500, the year and priced target. it's now 50 2.50 on the s&p 500 year end. this is after upgrades we got just last week from goldman sachs and out looking for 5200. if the second upgrade from them in the past couple of months. ubs is looking for 5400. this is the line we get from piper sandler this morning. we put out five k at the end of the year and thought we would see the market rates between plus five and -10%. we've got the high bond yields in the equity market kept on rallying.

larger cap growth continues and we are adjusting our year end target higher to communicate a constructive view on this area of the market. they go on to say we do not have as bullish views on areas of the market that do not have rising earnings estimates, namely small caps. small caps last week were in a little bit of trouble. lisa: you can have a segment of the market that continues to fall off even as the rest rallies with this goes to the view of not underweight necessarily some of the risk assets. rates repriced in that was right. the orderly nature is what has been a surprise. positioning has not shifted. it's not stretch but people are still in. jonathan: thank you. let's get an update on stories elsewhere this morning. here is your bloomberg brief. dani: cathie wood has sold

shares in tsmc for the first time in more than two years. her etf sold almost 8600 shares in taiwan's largest company friday. it also sold more than 2000 shares of nvidia. artificial intelligence intensifies. jpmorgan chase ceo jamie dimon have sold $150 million worth of bank stock. it's his first sale of his shares since he came to the helm 18 years ago. he and his family sold more than 800,000 shares on thursday. they are trading at a record high. republican national committee chair is leaving her post after weeks of pressure from donald trump. she has led the rnc's in 2017 but has been under scrutiny after a slew of election losses and disappointing fundraiser results. trump is now endorsing

daughter-in-law laura trump to cochair the party. in south carolina saturday, he also suggested a possible role for former white house aide kellyanne conway. that's your bloomberg brief. jonathan: up next, apple is betting on wearables. >> this is laying the groundwork for the next wave and if you look at vision pro two years from now, we think it will resemble sunglasses and be less than 15 hundred dollars. jonathan: that's coming up next, this ♪ ♪ is bloomberg. get help reaching your goals with j.p. morgan wealth plan, a digital money coach in the chase mobile® app. use it to set and track your goals, big and small... and see how changes you make today... could help put them within reach. from your first big move to retiring poolside -

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jonathan: nvidia is by a little more than 1% in premarket trading. the cash open is about 44 minutes away and equity futures are posited by 0.1% with yields

lower by almost one basis point. apple. is betting on wearables >> this is laying the groundwork for the next factor in if you look at vision pro two years from now, we think it will resemble sunglasses and less than $1500 and is about tapping the market. i think the street is missing in terms of what this will ultimately lead to. jonathan: that's the latest with apple looking to explain -- expanded line of wearable devices. this is in the wake of mixed reviews for $3500 vision pro headset. competition in the wearable spaces heating up with samsung debuting its health tracking ring at the mobile world congress in barcelona. mark gurman joins us now. let's get straight to it, what are you hearing and how seriously should we take these considerations?

>> what i'm hearing is apple is looking all sorts of new wearable devices to augment airpods and the vision pro and the apple watch. they looked at a smart ring similar to what samsung introduced formally this week. i don't believe the smart ring is currently still in development or something that apple is planning to bring to market. more interestingly, they can blend ar nai into new devices. when consideration is smart glasses. they're not ar glasses but glasses with clear lenses that use special speakers and external cameras that use ai. it's also voice control. the cameras can see what you are looking at and you can use your voice to help understand your surroundings. you can use your voice like you normally would with siri and it would be an upgraded type of

airpods with better battery life and better sensors. they are looking at adding that same technology into airpods so having cameras and airpods so they could identify your surroundings and you can use all sorts of ai nar features with that to have a better understanding of the world around you. ultimately, i don't think the ring will come to market. i believe the airpods will get cameras and additional sensors one day and i believe they are taking a close look at releasing non-ar display glasses as a steppingstone to coming out five years from now. jonathan: do they complement the iphone or replace it? >> i think all these products are complementary products to the iphone. there was a lot of discussion a few years ago about the idea of augmented reality glasses replacing the iphone. my take on that has changed. i don't necessarily think the iphone will go anywhere. people thought the ipads and

bigger smartphones would cannibalize laptops. laptops have gone nowhere. the phone eventually becomes the laptop. i think everyone will still carry phones for decades to come. you still need that main device, the product with the bigger display. but ar glasses will eventually arrive to augment that. i think the bigger shift is going to be from perhaps the watch for the ring to more of those head worn products. lisa: i'm trying to imagine a world where people are more distracted and separated from other people. instead communicating with them in some sort of technological metaverse. is that the reality we are talking about? people were talking about the idea that some of these wearables would replace the need to be glued to a screen but you say that's not it at all, just another way to reach the

metaverse? >> i don't think the metaverse's influence here. i don't think it is much to do with that. the ultimate vision of these glasses, this won't be in next two years or under $1500. it will be five years from now and very expensive. the idea being you're getting all that information you normally get on apple watch into your field of view. there is room for multiple products. i think there is room for the vision pro at home as an entertainment and content consumption device, maybe as a computer replacement. i think that's a viable situation. on the go, instead of using your apple watch is, you are out and about and have the augmented reality glasses and you can use them to you jews -- to use your music playback and voice control and voice messages and phone calls on the go where you would normally use your phone walking down the street or to the office.

maybe you would use the phone when you are sitting down for a more complex task. if you want to get real work done, maybe you are doing vision pro or maybe a laptop. all of these products need to work together and integrate. apple is not going to let each product chemical test cannibalize each other. they will leave room for the products to work together because they technically want consumers to own everything. they don't want you to choose between one product or another. they want you to have a watch on your wrist, glasses on your face and a phone on your desk in your pocket and the laptop at home. annmarie: if you're buying the glasses, why would you need to buy the vision pro? >> there would be different use cases. the glasses would be augmented reality only products. it wouldn't be all encompassing or extraordinarily immersive like the vision pro. if you want to watch a movie,

you will use a vision pro. the other thing is computing performance. the glasses will have enough performance that has to balance enough to have proper battery life. you would wear those throughout the day but if you want to get real work done, you need better performance to do photo or video editing or watch a 3d movie. they are two distinct products. tim cook and mark zuckerberg are hardly best of friends. do you see meta and apple being bigger competitors in the years to come? >> absolutely. meta has taken the android and google role in this world. android is not shown their ex r version yet and i expect them to do that this year at the earliest by the beginning of next year at the latest. certainly, the big approach that me shouldt take is looking to

licensea some of their hardware and some of their operating system to third parties and get the met servicesa and platform onto his many third-party devices as possible like android did with their smartphone approach. apple will continue to create everything in-house. i certainly see them in a battle for years to come. meta is way closer than apple on bringing glasses to market. apple is five years from now but the reality is, you need to balance displays and processing performance and battery life and that takes time. meta has simply been at this a little longer than apple. the apple headset wants to decade after oculus. apple has done pretty well for first generation products.

jonathan: how does apple manage the data story against meta? what has happened to google is a company? why aren't they at the forefront of these conversations in a way they would have been a few years ago? >> the google question is interesting. they had such a strong role over the smartphone market with android and it's a colossal failure for google. i think they completely missed the boat on augmented or virtual reality operating systems. they worked on it for many years. they were at the forefront of this but they really missed out. they needed to create this exar equivalent to android and license it to his many headset makers as possible. they are working with samsung right now on a mixed reality headset. they believe it will compete

with the vision pro but i think it's too little too late. i don't anticipate this happening but their best bet is to figure it way to partner with meta and going in on it together because they are so behind at this point. the meta xr operating systems based on android so the underpinnings are there. it will be interesting how they bring a partnership like that to market. with apple, what you use on the device stays on the device. jonathan: thanks for getting up early on the west coast. coming up tomorrow, franklin templeton. from new york city, this is bloomberg. ♪

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manus: has kathy woods cells into the rally, hedge funds lighten up on tech. we debate over the next hour. count down to the open begins now. >> everything you need to get set for the start of trading, this is bloomberg the open with jonathan ferro. on manus: coming up on this show , stocks ahead of a busy week for economic data.