sonali: still firmly below the

4.50 level, now around 4.48. we did start the week above 4.60. we have seen a drift lower after the payrolls print. cold spot hitting fresh records. i am seeing the best week for gold since october. midday movers on the equity side. the biggest date decline since november 2022. analyst glazing -- analyst raising concerns about the lack of catalyst. in the crypto space bitcoin touched $70,000 for the first time ever in coy's base -- and coinbase climbed above its direct listing price for the first time in more than two years. shares were up nearly 25% this week. on the economic front the february job report confounding economists across wall street, including mohamed el-erian.

>> i am paralyzed. this is an ambiguous report. one today while we get ambiguous reports. we continue to produce jobs and contain monthly hourly earnings. the u.s. is exceptional. markets have priced in expectations and that is why i see this as ambiguous as opposed to simply positive. sonali: let's discuss this further with tiffany wilding. what did you make of what we saw today? tiffany: i cannot agree more. i thought today's report was very mixed. mixed signals in the sense you had a strong and continued strong gains in the headline payroll, monthly payroll gains. the so-called household survey which is the basis for the unemployment rate was weaker. taking a step back and going

through the monthly noise, the concern we have had is the u.s. economy has been growing at a very strong pace. over 3% last year growth is higher than underlying potential. when you have growth running higher than potential, what that usually means is the unemployment rate should be falling, not rising. you have payroll growth, which is potentially re-accelerating. that is also the federal reserve concern when they say the to get more confidence. sonali: when you look at the inflation print next week, what will you be looking for? will it lend an all clear if there is improving data? do you think the fed will need

to wait longer for not that first rate cut but for the second one? tiffany: our view is overall the data and what we hear from the fed will be more consistent with a midyear first cut than a march 1 cut. there is a lot -- as we are mentioning with the payroll report, there's a lot of noise. in january you had noisy looking increase in inflation and the shelter categories. we think that probably moderates. what we would say is our forecast for inflation this year is to your than what the fed is currently projecting. core pce ends the year closer to 3% than 2%. fed officials are currently projecting at 2.4%.

there is the potential for upside surprises as we move throughout the year on the inflation side, especially at we do not get labor market cooling. there is also a question of how much above target inflation the fed is willing to tolerate. even if it is running at 2%, they get going on rate cuts, you see a couple of sequence of cuts throughout this year. sonali: for future still pointing to at least three rate cuts this year. say they do not materialized. see you get two or one? what else starts to soft and and what does that path look like in terms of the higher interest rates rolling into the economy? tiffany: i think given the strong growth trends that i mentioned, the strong growth we are seeing in the united states, and you are not seeing that anywhere else. we are seeing technical recessions including germany,

u.k., and japan. the u.s. continues to be a standout region for growth. you need tighter financial conditions in order to cool that growth off. maybe that is exactly what the economy needs. having said that, we think there is what we call "hotspots" or places we are monitoring closely. the commercial real estate sector in the united states is going through a recession. how much that spills over into the broader economy is up week question -- is a key question. some of the smaller regional banks are probably under reserved for the type of risk on their balance sheet. there will be volatility in these sectors. maybe that volatility and more tightening of credit conditions is exactly with the u.s. economy needs in order to bring down -- get that last mile of inflation behind us. sonali: you think about the last

mile of inflation rates staying higher. do you still have any worries about this economy? if you see the data start to soft and, we know the economy -- the market can be walking on a razors edge sometimes. what are you looking out for in terms of clues things are softening too quickly even if you are seeing decent data today? tiffany: the consumer sector is clearly the one you have to watch. even there i would say under the surface things are bifurcated. i hate to use the term a two speed economy but i think it is relevant. consumers on the lower end of the income spectrum have not been doing as well. you have seen delinquencies start to rise.

subprime is seeing more than that. on the higher income, that is where we had excess savings. the thing we are looking for is the consumer. the unemployment rate in the labor market will be a key input into that. as you have consumers spend down excess savings that would put downward pressure on corporate profits. we are not seeing it in the magnificent seven. that would be an indicator that things are slowing. sonali: jerome powell did get a number of questions on the balance sheet reduction. how do you argue this is not an economy or market that is on life support when the fed balance sheet is still as bloated as it is? tiffany: exactly.

our view is the federal reserve can continue to shrink its balance sheet. the one thing i would note is although it has been reducing the size of its asset holdings over the past year or more, it has not actually tightened liquidity conditions as you would expect. we still have very similar amounts of bank reserves in the system and that is because most of the decline is coming out of the fed's reverse repo facility. what the fed has done so far on qt has not quantitatively tightened anything. there is more room to run. it is reasonable for the fed to reduce the pace at which it is letting assets rolloff in terms of prudence and things like that. nevertheless we think they can go for a while and get the balance sheet down further. we think they can continue qt through the end of 2024 if not

into 2025. sonali: that is pimco economist tiffany wilding. thank you for your time on such a busy week. coming up, the longest-serving female ceo discusses the state of her week and the property market. stick with us. this is bloomberg. ♪ tamra, izzy, and emma... they respond to emails with phone calls... and they don't 'circle back', they're already there. they wear business sneakers and pad their keyboards with something that makes their clickety-clacking... clickety-clackier. but no one loves logistics as much as they do. you need tamra, izzy, and emma.

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sonali: this is "bloomberg markets." it is time for the stock of the hour. we have been talking about the moves in new york and unity bank. yesterday jay powell addressed

that threat. >> this is a problem we will be working on for years more. there will be bank failures but this is not the big banks. it is not a first-order issue for any of the large banks. it is more smaller and medium-sized banks that have these issues. sonali: will discuss the broader market with debbie cafaro with a focus on senior housing. we brought you in with your community bank with the thinking the regional banking system and the tightness you are seeing when you're thinking about the broader sector and the tightening of those lending conditions, what kind of impact is there at the end of the day? debbie: thank you for having me. we are in the health care in senior living business so we have incredible demand which is different from a lot of the commercial real estate space. there are definitely tightening

financial conditions because of commercial real estate loans in the financial sector. those are concentrated in those smaller banks. the 20 and blows that hold most of that debt. we are using that as an opportunity because we are the second largest owner of senior housing in the u.s.. we have incredible external growth opportunity. sonali: how much do prices have to decline before you step in? debbie: we were predicting this last year and as you saw conditions tightening, it takes a while for the impact to be felt. starting at the end of 2023 and

moving into 2024 we are seeing a unique opportunity for value creation where we have good assets and yields of 7% and unlevered rates of return in the midteens while we are facing this incredible demographic demand and low supply. you do not often see that great combination of investment opportunities with demand and with high returns. we have a lot of access to capital where a strong company, 35 billion in assets. we have raised 5 billion over the last year or so at 5% or lower. that gives us great financial strength. with our position in the business of senior housing we are effectively able to be an acquirer. sonali: on one hand there is the

complaint across america that new buyers have that the baby uber generation -- that the baby boomer generation has not been moving out of their homes. these are not nursing homes. these are senior housing facilities. you see a movement into those facilities? what is causing that movement? debbie: what is causing the movement is the number of over 80 population that wants to live in senior housing for the benefits it provides. what you are seeing is over 80 is growing 6 million people from 13 million to 20 million by 2030 and it is a function in that customer base from a couple hundred thousand added to half a million and another nine hunt thousand -- another 900,000 to a million by 2020 seven. those are individuals who own their homes outright so they are able to sell their homes, and affordability is at strong levels in our markets.

it is a variable affordable product and most of the seniors in our markets have seven plus time the assets and household income needed to live in a senior living very nicely. sonali: let's go back to this idea of valuations. even if you are seeing opportunities to buy things, i am curious about the broader commentary. as financial conditions have remained tight and lenders have found it difficult to engage in the property sector, what does that mean above and beyond any issues you are seeing a new york community bank? debbie: for the commercial real estate sector writ large, those tightening financial conditions are having an impact, particularly in sectors like office, where you have the demand fall off and all of the aspects that go with that. you have certain other sectors like the multifamily business

where you have this influx of supply, and then you have sectors like ours and the data centers where you have demand and revenue growth and growth that as well outpacing those. there will be an impact on the smaller lenders. we have seen that. it is something the system will have to absorb over time with $1 trillion of real estate loans coming due in 2024. it is having an effect. the best elixir for that might be lower rates. rates may be cut this year. for capital-intensive sectors like commercial real estate that is a great antidote. sonali: even if we only got one rate cut, what would that mean for your business? debbie: most prices are off the

10 year bond anyway but there's a correlation between the short and long rates. as rates come down it makes it easier for people to refinance. in our sector we have this unique opportunity for value. the profits from the senior housing are not yet back to pre-covid levels. it is very hard for non-strong owners to refinance effectively in a higher interest rate environment with more equity required and that is where we come in. we are also seeing this organic growth of 25% year-over-year growth in our existing portfolio. that positioning distinguishes us. sonali: thank you very much. that is debbie cafaro talking to us at an interesting time in real estate markets. coming up, risky bonds are being

safer fixed income assets. we will take a look at why next on today's wall street beat. stick with us. 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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sonali: it is time for my favorite beat, the wall street beat where we look at what is buzzing on wall street. today we are looking at how the riskiest part of the global credit markets are leading fixed income returns. joining us is bloomberg's olivia ray monday. your headline caught my attention. interest rates are high but money is easy and credit markets are acting like easy money never ended. why? olivia: is interesting. essentially we are at this moment in time where markets are

assuming we will hit a soft landing. even more important than that, is not even the assumption that the soft landing would happen, it is that nothing bad would happen now. nyc is orderly, there will be no shop surprises so spreads keep getting tighter. there is a lot of money looking to invest in corporate bonds. sonali: how do investors break in the risk? are they getting compensated? they believe yields are higher. for credit, if you lose money you lose it forever. it is not like the equity market. olivia: it is all about your downside protection. you have so many yield buyers coming in and they are seeing the yields you are getting 5% over on investment great and high-yield and they are happy to clip the coupon. even if you're looking at returns down and they were down all of last year before

december. they were down again this year. it is interesting when people see these yields and say i want that. if you look on the spread basis for the total return basis, the asset classes not performing as well. it is the junkie's junk outperforming, which is perplexing markets. sonali: do investors care about how companies are using the money? you see funding buybacks, m&a as well. do they care? olivia: i do not think they care. there's so much money flowing into the high-yield bond market. people needs to invest it somewhere so we've absorbed the m&a financing well. we have risky leveraged buyout deals come to the market with riskier financing packages. those are all being met with strong demand. sonali: there is a disquiet about whether the euphoria is getting out of hand.

is it? olivia: it is possible it is. there is no downside risk priced into the market. if you are happy putting the coupon at 5%, that is fine. there is a risk spreads will go wider. that is the concern is that everything is price to perfection. if anything does happen that is not expected we will see spreads move wider. sonali: that is bloomberg's olivia raymonde. check out one of her stories, the most read of the day. we have seen the s&p 500 wavering all day. now steeping declines to almost .5%. the nasdaq down 1.2%. the two your lower. it is just about at 4.50% on the day. gold still facing that record rally. that does it for bloomberg markets. same time, same place all through next week.

next week is another busy week of economic data had. stay with us through the close. this is bloomberg. ♪

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>> from the world of politics to the world of business, this is "balance of power."