ye yes you do. a kohler walk-in bath provides independence with peace of mind. call... to receive one-thousand dollars off your kohler walk-in bath. and right now we're offering no payments for eighteen months. caroline: from bloomberg world headquarters in new york and right here in london, i'm caroline hyde. romaine: let's take a look at where we stand in financial markets. mixed economic data and higher treasury yields. joe: the question is, "what'd you miss?" caroline: today was a reminder that the current economic recovery is again uneven. you can say we had a bit of a pothole. u.s. retail sales declining in

february as bad winter weather took over large parts of the country. economists saying it is a temporary setback. new things are emerging to make it as smooth as possible. treasury secretary yellen is not worried the u.s. has to borrow a chunk of change. what we will sit with now, retail numbers, what do you make of it? joe: i like that, by the way. pothole, setting up our infrastructure discussion. the decline was worse than expected. how much of that was the weather, how much of it was other seasonal factors, what does that say about the recovery? that is what we will discuss in a minute. romaine: i heard about it. joe: it was on the news quite a bit. joining us with more is olivia rockman.

thank you so much for joining us. when the headline first flashed, much worse than expected, but it does not seem like it was anything actually in this in the end that gave economists too much reason to worry. what is your take away? olivia: economists are really writing off due to the winter storms. also, taxes coming in later because of the filing window pushed back two weeks. there were a couple of factors on top of the weather that brought retail sales down. caroline: confident for march? olivia: yeah. march is looking good and economists are saying we should continue to see the trend that we saw in january again in this month. roma all right. we also talked about the manufacturing numbers. everyone is focusing on the weather, saying you have

descriptions because of the weather and factory production because of the weather. is there any sense knows disruptions might linger a little bit longer than just a month or so? olivia: when we look at factory production and the output overall, another factor that was set up in the report is the global semi conductor shortage. that especially impacted autos. joe: obviously, we have the fed tomorrow. is there anything at all in the report or anything in the data that we got this week that would change the fed's outlook on the economy one way or another? olivia: the fed has been really focused on the idea that it is looking for sustained price increases. we have supply chain disruption when it comes to semi conductors and the labor market and we have seen company earning calls saying they are successfully pricing higher, the fed is

insisting on waiting to see that is sustained, so we expect them to keep with their constant rates spread the next couple years. caroline: not just sustained pricing, but sustained labor market improvement. it seems to be the key measure of success. olivia: absolutely. while we saw the jobs report in february, there is still a lot of recovery to be done. we are still down almost 10 million jobs from when we entered this crisis. caroline: olivia, we thank you. still to be seen on the data side of the equation of the federal reserve but we are now going to put into the fiscal side. resident biden turning to the infrastructure part of his plan. could it be a federal tax hike? raising taxes may not be the way to go. our guest joins us from bloomberg opinion. this is bloomberg. ♪

romaine: welcome back to "what'd you miss?" we are focused on the economic recovery. there is a lot of talk about fiscal stimulus bill and a potential infrastructure bill. we will see if that actually happens. in between, you have the fed. does the fed matter anymore? joe: i think in recent meetings, it has mattered less than this one. this might be one of the most

anticipated ones in a while because of course how much rates have picked up and how much growth expectations are. caroline: also, it feeds into holding rates slightly. yields have backed up to a certain degree. we know from a borrowing perspective the fiscal side is not to worry. janet yellen saying even with the yields backing up as they are, that does not increase. it will be lower because we are rolling up longer debt at the moment. at the moment, it is about the fed does not seem to matter, nor should anyone else perhaps. joe: should we just spend away on all of this? joining us with more insight is noah smith, who has a new column and bloomberg opinion, making the argument basically that we should not be using tax hikes to pay for it, for infrastructure. what is with this just put it on the deficit?

>> right. i don't think we can infinitely deficit spend on everything forever, but i think there are two things about this kind of green infrastructure spending that make it particularly good for deficit spending. number one, it is temporary. like covid relief, it will not be a become expense. number two, it is something that increases the activity of society as a whole. if you think about the economy and people at the citizens as the shareholders of the government, then you think about this borrowing to fund this infrastructure improvement as borrowing to raise shareholder incomes, which is when a company would do. you would not want companies to expand their function out of current revenues. no, you want to borrow them to do capital investment. this will earn a return for society. romaine: there is also when we talk about this particular infrastructure plan, at least from what we know so far by the biden administration and his

campaign, there will be a lotta focus on green energy. they will be shifting the economy, shifting these projects to something a lot different than what we would normally think of in an infrastructure bill. at least when you go back 20 years ago. how does that change the calculus of how he might try to find it and whether that would be successful? noah: right. actually, that increases the argument for deficit spending even more for two reasons. number one, this is getting cheaper fast. it is hard to overstate the degree to which solar and battery and to some extent wind are dropping in cost, which means the government can apply capital on a scale that no private company or a consortium of private companies can dream of doing. basically we can head of this trend and did a really high return on investment by investing in this technology that is dropping in cost so fast. the other reason is because there is a causal relationship here, a learning curve. the more we invest in this stuff, the more the cost drops even more so we are not just talking about green energy

preventing climate change carbon emissions. we are talking about cheap energy. since oil, we are finally getting a technology that gives us cheaper energy than fossil fuel's and that will spark a lot of productivity improvement that we cannot even imagine right now. again raising the return on investment. romaine: meanwhile -- caroline: meanwhile, you had janet yellen trying to lay the argument out that the old debt is coming due and it is more expensive. is that enough to persuade joe mentioned, the republicans in a particular way? noah: i don't know what the republican calculus says. every single republican voted against the cupboard relief bill even though it was possible with that it was possible -- it was popular with a majority of their constituents. whether that was a symbolic vote to show they are standing up to

the democrats or whatever, i cannot say. joan initially -- joe takes this stance but then comes around to voting with other democrats. i don't know. i am not an expert on that. i think we have to keep making the argument that this is borrowing to fund something with a high return. that is exactly what you want to borrow for. joe: setting aside the "how you pay for it" question, when you take multiple trillions of infrastructure spending over the next several years, in your view it all sounds good. people love infrastructure obviously. but in your view, where do we get the most bang for the buck specifically in terms of the productivity raising capital its miniature that pays dividends to the broad economy overall? noah: right. the most important thing for government to do is to create the kind of thing the private sector won't create. where you cannot just wait three

years and the private sector will do it eventually. that would include things like a modernized electrical grid. not going to tear up and rebuilt much of the electrical build to enhance connectivity to reduce intermittency. that is something the government needs to do. electric charging stations. unless you expect elon musk to raise the capital to build an entire nationwide network of charging stations for all companies, the government has to do this and have known this for years, to build out that network. romaine: you know this better than anybody, that there is a cohort that says the private industry does that. a lot of people will point to the test of charging stations and say he has built this money so far so all we need is volkswagen or someone come in with more. we have heard this in regards to infra structure with highways and bridges and things like that. why does that not work at scale? noah: it sort of works. it just takes a we need long time and is not widespread

enough. there is not nearly enough electric charging stations despite elon musk's best efforts. in addition to raise all the capital for that stuff, elon musk has to continually do goofy stance to attract more capital so he can keep building that stuff because our system is not very good at dishing out huge amounts of capital. in addition, if you rely on multiple companies to do it, every company wants to free ride and wait for somebody else to do it. can i you would -- can i use your charging station, by the way? if we did that across the country, we would be happy to an entire electric cart fleet by now and we are not. if we had not forced elon musk to do it all himself, and could have gone better. caroline: if we do not get bipartisanship on this front and it has to be forced through, do you think enough will be gained in terms of infrastructure plan? it will be big enough and bold enough as it was on the campaign

trail to change things? is that a wise use of money? noah: absolutely, yes. absolutely, yes. remember, this is not really about job creation. the relief bill will get us back on track economically after the covid recession. some of the infrastructure bill will be this periodic thing we need to do a lot, which is throw a pot of money at all these highways and bridges we need to repair. that is the kind of infrastructure everyone talks about, but this green infrastructure gives us a look at the cost curves, technology, how world changing it is, and you see we need to get in front of this. we used to get in front of it with things like big dams to create the hydropower or the tennessee valley authority or rural electrification which we did in the depression. we did so much investment to get ahead of these trends and maintain manufacturing dominance in the middle of the 20th century. we need to do that again or we will get behind. joe: i want to shift the

conversation slightly. i don't this is something we have talked about and you have been talking about as well, sort of waiting up to this -- sort of waking up to this idea of the dangerous dependence that the u.s. has on semi conductors overseas, the hollowing out of our own manufacturing capabilities, or high-technology. people are talking about industrial policy and state directed investment, to build up domestic know-how, domestic industry. a, do you think that is necessary? b, more importantly, what would be the right first step policy wise either spending or some other policy fostering that domestic capability? noah: right. great question. too big to answer right here. you did some podcasts and things about the semi conductor problem so you know as well as i do. i think semi conductors are a special case. what we have to do is pay tsmc to put a bunch of factories

in the u.s. so china cannot block. outside of that, i think there is a broader question about how to foster clusters of high-technology industries in the united states, and i think there are capacity boating measures we can do various ways to help get the clusters going. i think that subsidizing experts, which under the wto you cannot do this explicitly, but you can do a number of other implied ways, which of course china does all of. by subsidizing exports instead of picking winners, we can encourage american companies to go out and compete in global markets and find where they are strong and build up sort of these industry clusters here. there may be a necessity to reshore certain industries in order to reduce vulnerability in the case of the conflict with

china or things like that, but i think overall, there will be some areas in which the united states economy -- they will be lots of areas and we cannot predict them. inducing american companies to compete in the world market is pumping the market to discover what we are good at in this new emerging technological age. caroline: well put. bloomberg opinion columnist noah smith, we thank you for joining us. he writes columns on bloomberg. we have the fed coming up, right? romaine: i am told it is a big deal and there will be a special right here on bloomberg television. you can watch that tomorrow. we are talking about the potential tone change. i don't know. we will talk about it after the break. this is bloomberg ♪. -- this is bloomberg. ♪

caroline: today we are focused

on the economic recovery and what could help fuel the comeback, but we were discussing earlier that one person we are worried about perhaps having to pay for these plans, secretary janet yellen. joe: it is interesting and you alluded to it earlier. despite all of the new debt and the rates, our share you to be excited to climb for several years. probably one of the meaningful letters there is. romaine: yeah. the data shows that. part of the culture war -- world? joe: i am sure it will become that. joining us now is brian. the most anticipated fed decision since the last one at least. what in your view could be the biggest headline? what is the main thing you want to hear? >> i think first of all, if there is any clarity on the slr

extension. i am not sure that will happen tomorrow. it is not something they would tend to do in a fed meeting but if they do, that would be big news. otherwise, looking at the summary of economic projections. it is one of those meetings. they release what they think is going to be the change in real gdp, the inflation rate, and the unemployment rate for the next few years. 2023 is where a lot of investors have their eye because that is where the fed rate hikes are being priced in now. right now, no rate hikes. if they change their view and see inflation coming around the corner and see really strong growth for the next few years, that can change. caroline: brian, then comes the press conference. i am sure if thoughts have changed, jay powell has a really ferocious issue trying to talk the market down from thinking right hikes are coming thick and fast and soon. brian: yeah. i was thinking maybe there is

research out saying look for a move up in the 2023 dot to a rate hike. i don't see it. i think the fed will be real patient and keep core pce inflation locked around 2% for the next few years and wait to see it actually materialize before they start to move the dots. you are right, jay powell will have a difficult time explaining why he is demanding fiscal policy and then all of a sudden the fed will hike and counteract that to some extent. romaine: for all the traders out there, all the people watching the market and the market metrics themselves, should they be paying more attention to the long end of the curve, the short end of the curve, or in between? brian: i think it is really hard right now because the market is saying, we think the fed is going to reach its inflation target and the economy will be really strong and the fed will have reason to hike under its new framework.

but nobody really knows the inflation part of that equation and that is the real hard thing. because we kept saying during the last hiking cycle inflation is around the corner, we need to hike. it never got to the point that the fed wants to see, which is a sustained rise above 2% for a decent period of time. i don't think anyone knows. i don't think the fed really knows frankly where the inflation which they measure will come from so i think they will be really reluctant to tell the market we ming this tfore they actually see it. joe: going back to the rates for a second, we have seen this fairly substantial move up in the rates. the view from all the fed people who have spoken is they are not worried about it. it reflects growth or optimism, is not a threat. presumably, they don't want to put fuel on the fire and have another big upward tension in a short period of time, so what is the messaging they can establish

to do exactly that? this idea that not wanting the right hikes but not pushing them further. brian: it is a really tough line that the fed and jay powell is trying to toe here. if they showed a rate hike projected in 2023, that might calm the market down a little bit, basically saying we see the higher inflation and greater growth and will lean against them a little bit. i don't think they want to do that. they don't want to lock themselves into anything right now. i think jay powell will say it is good to be optimistic but we have a long way to go. and take that for what it is worth and go from there. it is really hard. you cannot control the long end to a great extent. all he can say is this is what we are seeing, this is our framework, and roll with it. i think that is why you are seeing the tantrums now because they are trying to figure out

the new reaction function at the fat and whether they can bully the fed into changing the reaction function or whether the reaction function is not quite as ironclad as powell has made it seem. it will be an interesting reaction to the decision for sure. it could be a little messy. caroline: a little messy. brian, of course all eyes on the fed special tomorrow at 2:00 p.m. eastern. we used the turn of phrase, tantrum, bullying, a bit messy. it will be an argument among adults at the moment. joe: bond traders are not being fair to the fed. they need to take it easier on the fed. caroline: very nice. romaine: are you hosting the show tomorrow, the fed special? caroline: i am indeed with a healthy those of tom keene, scarlet fu. a good lineup. we got scott minerd, pimco,

money managers. you name it. you will be there too. romaine: i might. i will stand on the sidelines and watch. joe: "bloomberg technology" is up next in the u.s.. [laughter] romaine: have a great evening. this is bloomberg. ♪

♪ emily: i'm emily chang in san francisco. this is "bloomberg technology." first we start with breaking news out of uber. the company planning to reclassify all 70,000 of its paid drivers as workers after a landmark ruling from the supreme court. this means drivers will be entitled to minimum wage, vacation pay, and other benefits. will an impact uber in other

markets?