is bigger going on the bond market than just the inflation story. >> there is a good alternative right now, and that alternative is still equities. >> investors don't seem to care. they are hooked on the iv a very low interest rates. >> investors are tired of throwing good money after bad money. >> the fed is your friend during this period. >> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. jonathan: it is cpi wednesday. good morning. this is "bloomberg surveillance ," live on tv and radio. alongside tom keene and lisa abramowicz, i'm jonathan ferro. your equity market a little softer, -15 on the s&p, down 0.3%. the data 90 minutes away. tom: equities finally reacting to what we see on fixed income.

on this cpi wednesday, the linkage of inflation dynamics into the fixed income market front and center. jonathan: and the international price pressure as well. ppi out of china, 26 year high. that can bleed out to the rest of the world. tom: brazil coming out minutes ago, 10% on their inflation as well. these are big numbers. jonathan: the incoming economic data, trying to understand it and apply it to monetary policy, and to push it through the bond market. really complex and quite difficult at times. friday was a great example of that post payrolls. lisa: basically, they are buying the line that the fed is saying, even if they stay transitory is becoming a dirty word. that is the message the bond market is saying. i wonder at what point the bond market starts to react to the data, particularly with employment coming in as hot as it is. jonathan: we've got to drop 50

word -- drop -- drop the t-word going into 2022. tom: it's v-shaped. jonathan: remember v-shaped? remember january v-shaped, that we would all get through this, that china would have a v-shaped recovery and it wouldn't really touch the rest of the world? here we are still talking about it. let's whip through the price action. just a little bit softer this morning. 1.4813% on tens. euro-dollar, $1.1549. lisa: perhaps the conversation isn't so much transitory versus persistent, but the nature of the inflationary push. how much are we getting inflation and consumer goods offset by inflation in wages? can get some sort of conductivity between these two? we get that conductivity today with the data dump, it: 30 a.m.

on this cpi wednesday, as we have branded it. u.s. cpi data for the month of october, the expectation is for it to be 5.9% year-over-year, the fastest pace of consumer price increases going back to 1990. dovetail that into the labor market. at the same time, we are getting u.s. initial jobless claims forward from tomorrow. the expedition is for a new post-pandemic low in the number of individuals filing for benefits after losing or leaving their jobs. how much does this tighter labor market translate into higher wages? we have seen real wages still stay below what we saw 5, 6, 7 years ago. how much can we get those wages to move in tandem with consumer prices? president biden will be in baltimore talking about the bipartisan infra structure plan to remedy supply disruptions. how does he address the near term supply chain disruptions?

there isn't that much he can do given that it is global. jonathan: and inflation, too. the difference between the two is not just 10 basis points. to see the number six on the front page can be problematic. tom: totally agree. 6.4 percent, you actually get back to a volker like statistic. jonathan: the data at 8:30 eastern time. let's discuss it with ashok bhatia, deputy chief investment officer at neuberger berman. what are you looking for at 8:30 eastern? ashok: this should be the peak inflation print near-term in the u.s. it is maybe a little stronger than consensus. but this is probably not going to resolve the key market debates, and that is how long

does this elevated inflation last, and second, what is the fed going to do about it. for both of those questions, the answers aren't coming today. we are going to need to see a couple more prints of cpi into next year, and for the reaction function, we still don't know who's going to be the chair of the fed. tom: what he actually doing in this maelstrom? ashok: one is reducing credit risk. we are at valuations for all global credit markets that are significantly tighter than where we have been over the last 18 months, and that is now against the backdrop that central bank policy is going to be less accommodative next year, and we are going to be debating inflation and inflation reaction functions. these are new debates for the markets. for us, that means volatility and it means the risk levels you had with valuations were a lot

more attractive for bond investors. the second is those levels can persist come about from evaluation perspective, you are not on the cheap side of value right now. lisa: it seems like you are risk-averse, and yet, reading your research, it seems as though you like chinese government bonds here, even though we just saw the fastest pace of producer price increases going back in 26 years. why? ashok: there are a few pockets of things we like. we like european high-yield better than u.s. high-yield. as you mentioned, would you like chinese government fixed income. the reason for that is we think china, they have been having a

credit tightening cycle, dealing with the real estate issues and rebalancing the economy. we think as we get into 2022, that china cycle gets to be a little bit more policy friendly and will support government bonds and the highest quality bank bonds. it is important to note on china fixed income, there is an intermediate-term trend of these securities, particularly the higher quality securities entering the broader bond market. they've entered two of the biggest bond market indices we've used over the last couple of years, and that is going to be bringing in new investors for a time. jonathan: if that what underpins the view more broadly? ashok: we think em is, as you know, we have seen over the last few months he would getting of currencies and rate hikes price. so brazil, mexico, we are seeing a couple hundred basis points of

hiking cycles come into these markets. our view is that, a little bit contrasting with where we sit in developed market bonds, we are on the better side of value for places like that, and also a lower risk country may be like russia. for us, emerging-market allocations have been ticking slightly higher over the last couple of months, and certainly that is where we perceive more value than some of the broader, bigger credit markets right now. tom: what you do with idiosyncratic stories like turkey or argentinian peso printing 100 to the dollar, and the black market quoted out near 200 paces to the dollar? can you be opportunistic there? ashok: in some strategies, definitely. argentina for a conservative or moderate bond market investor, that is definitely on the riskier spectrum. i think the key thing for a lot of these positions, it really

speaks to 2022. when we started 2021, where you knew that central banks were going to be keeping their ped al on the metal and valuations were attractive, you could have larger positions because you have a very strong tailwind behind you. that tailwind is showing up in emerging markets as they deal with higher inflation and have to write hakes or signal hikes, or in the case of turkey, go the other way. what it is introducing is that that tailwind is coming away, and i think what it really argues for is recognizing that the low volatility we have seen in bond markets is going down, and that argues for reduced positions in our minds, as well as thinking about these markets a little more tactically. jonathan: always great to catch up with you. to see you. -- good to see you. the broader fixed income

universe anticipating the cpi data at it: 30 eastern time. there's another scoring to discuss, the biggest initial public offering of the year so far. rivian, the electric carmaker, raising will have $76 billion. they only just started delivering vehicles a couple of months ago. tom: what does the sell side do on this? tesla is a tech company or not a company, i get it. are we going to have the same debate with this company? jonathan: i think we probably will. lisa: i love that hertz and avis just have to mention the stock, and it goes through the roof. here's a company that focuses on electric, and its share price is absolutely surging in the ipo. i wonder if that is what we are going to look back and call this moment. jonathan: the difficulty tesla

had was scaling up production. even if the order book is fantastic, scaling up production might be really tricky. i have no idea how that pans out. we will talk to the ceo a little later. i wonder what questions you would have for him. lisa: how do you compete with gm when it comes to sourcing the materials, hiring the right personnel, and delivering cars on the supply chain given the lack of dominance that they have? jonathan: forward market cap, $80 billion. $80 billion for a company that has only just started delivering vehicles. i'm really looking forward to that conversation with ed ludlow and the ceo. do not miss that. the equity market down 13 on the s&p. we are negative about 0.4% on the s&p 500, going into cpi data a little bit later, 8:30 eastern time. this is bloomberg. ritika: with the first word news, i'm ritika gupta.

president biden and china's xi jinping will hold a virtual summit next week. no specific date has been set. ties between the world's two largest economies have improved in recent months. still, the u.s. and china have thought over taiwan, and washington is concerned about beijing's spending nuclear arsenal. electric vehicle maker rivian has raised $11.9 billion this year and the biggest ipo of the year. it is the six largest of all time. rivian is backed by companies such as ford and amazon, valued at about $76 billion. google has lost its appeal of a $2.8 billion antitrust fine in europe. the eu general court issued its ruling today. google is accused of thwarting smaller search services. it is a case of three you court fights in a case to rein in silicon valley. the u.k. won't join an alliance being spearheaded by denmark and costa rica, expected to announce as many as 10 to 15 new members today as climate talks in

glasgow, but the u.k. says it isn't joining because ending fossil fuel productions could cause a cliff's edge in energy supply. tesla has stabilized after a two day, 16% loss. that the klein cut almost $200 billion off the electric carmaker's value, and $50 billion off elon musk's personal fortune. he is still the world's richest person, though. global news 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i'm ritika gupta. this is bloomberg. ♪

>> powell and brainard are an amazing team. together, they do so much more.

and i think this could very well be because they come at it from different backgrounds. powell has looked to brainard for a lot of intellectual leadership. i think they would be a really knock it out of the park, powell as chair, brainard as vice chair. jonathan: great to catch up with the senior fellow at the jain family institute and former economist for the federal reserve. good morning on this cpi wednesday. your equity market softer. we are -12, down by about 0.25%. yields higher by three or four basis points to 1.475 -- to 1.4711%. tom: the foreign exchange market with a persistent dxy of love -- persistent dxy above 94. dollar-yen gets my attention.

let's get right to it and washington. they are not looking at the canadian currency. they are looking at the adjustment of party politics. annmarie hordern joins us from baltimore i believe this morning. axios writing up the new normal. it is not pimco, not what we heard years ago. it is the idea of normal versus not normal democratic party groups, i should say, or cohorts. which biden shows up today, the normal or abnormal biden? [laughter] annmarie: ok, i think we can agree it is going to be the normal biden today. this is going to be disinterest biden who is able -- going to be the centrist biden who is able to bring together both sides to pass a bipartisan infrastructure bill. this is one of his first stops over the country to touting that hard and for structure bill,

getting that new spending, and that is what he's going to be talking about today in baltimore. tom: what is interesting here is the fervor with what the president once to embrace. you are reporting that the president once to be normal, or is he still struggling between the progressives in the moderates? annmarie: of course he is struggling because this is the second part of the agenda he is struggling with, bridging the divide between the moderates and disinterest -- and the centrists with the progressives of his party. he needs every single senator to sign up for the second part of his agenda, and it is going to be a tough slog. potentially before thanksgiving, they are thinking. my timetable x potentially before christmas, when it really comes down to the wire. but that is where he is going to struggle. but today, you can bet that the president is going to talk about the fact that he campaigned on bringing the country together,

and with this hard infrastructure bill, yesterday mitch mcconnell said it was a godsend to his state of kentucky, that is what the president's go to talk about, the fact that he's able to do something bipartisan in washington, d.c. that the former administration was unable to get over the finish line. jonathan: how much is -- lisa: how much is today's cpi print going to come look at the president upon message? -- the present's message -- going to complicate the president's message? annmarie: i guess it depends on the number. he will likely point to what he has been doing with the current fed chair, jay powell, who says inflation pressures are transitory. we should also note his economic team is debating whether or not to keep jay powell in that slot, but that is likely going to be a talking point. if we do see pressures start to ease, he's going to talk about the fact that the creative maneuvering his administration is trying to do in terms of

alleviating those concerns is actually working. jonathan: and that is going to be the focus a little bit later. good to catch up. annmarie hordern over in baltimore. the president set to address the public a little later on. i am with you, that is going to be the elephant in the room a little bit later on this afternoon. if it's got a six handle, it is a bigger elephant. the range is pretty wide. 5.4% at the low, 6% at the high-end. i don't think it really resonates with the electorate if you say it is going away next year. we have been talking about that through much of this year. lisa: it is not resonating with joe manchin. he has been using the inflationary reads as a reason to not spend more money. how much does this influence the moderate vote in the democratic party as they try to push a number of these proposals over the finish line? that to me is going to be one of the most interesting responses to watch. jonathan: the federal reserve gets to talk about core, all of

that good stuff. the administration isn't going to do that. you don't could to strip out oil, energy costs, food, all of that stuff. the end adminstration has to think about everyday bills for everyday americans. tom: it is really interesting. this has been a time of debate. this goes back forever, really back as far to arthur burns before greenspan. i haven't heard chair powell doing that much recently. i will give him credit for that. did you see the ge news? ge launches $23 billion bond tender offer to slash their debt load. this is really something. this is not apple or microsoft with minuscule percentage of debt. that is 36% some of debt. this goes back to corporate dynamism and corporate action that i thing is underestimated. jonathan: it has taken a long time for this company to adapt to the world around it. tom: i just looked at the

weighted average cost of capital function. i just looked at return on invested capital, and it is amazing what culp has done out of 2018 and the crater there. the cards he was dealt were just extraordinary. this action you see, and as joel lovington told us yesterday, -- joel levington told us yesterday, who is next? jonathan: did we need an outsider to make it happen? tom: yes, this is a sensitive issue always. when you can get someone of culp's character and what he did at dan her years ago -- lisa: but how they got to this point was reducing debt dramatically. how could they reduce debt dramatically and actually finance themselves at a good cost because of the backdrop of how low rates were and how much demand there was forget.

how much has that ultra easy credit market given the flux ability to these companies to make adjustments in their capital structure that are very needed? to me, this is something to watch because ge was a debt story among all others. jonathan: do you know what i am excited about? not talking about ge anymore. we won't have to talk about ge. it just remind me of deutsche bank. do you remember how often we use to go abou liket deutsche bank -- about deutsche bank? tom: i have to be careful here. jonathan: you be careful. you just don't cover it anymore. tom: it not deutsche bank wednesday. it is cpi wednesday. jonathan: let's build up some enthusiasm for the data point that comes in one hour and five minutes. lisa: i'm enthusiastic. i thing it is fascinating. jonathan: do i not sound enthusiastic? come on. lisa: not ge. jonathan: you're not a -- i am

not enthusiastic about that, you are right. [laughter] it is like a relic of years and years ago that certain people are still obsessed with, and other people have moved on front. lisa: are you trolling anyone? jonathan: not at all. lisa: should we talk about the dow? tom: you can't spell schenectady. jonathan: you're right, i can't. [laughter]

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jonathan: it is cpi wednesday. do like that, tom? tom: i like it. jonathan: negative about 0.25% on the s&p 500. they have spelled my name right. do they usually make a mistake like that. tom: sometimes they do. jonathan: eight day winning streak on the s&p into yesterday. we break that going into cpi. ppi yesterday was firm. cpi overnight in china was really firm. ppi and china, 26 year high. has we seen the worst of it -- have we seen the worst of it? the range is pretty wide. let's talk about the bond market going into that. tens look like this, 1.4728

present. on 30's, up three. we know the story is not on the nominal yield. it is on reels. deeply negative on tens. tom: we are going to have a great conversation in a moment. you want to stay frozen in your chair, and your car. we are watching this worldwide. i'm sorry, the negative yield story, we don't know what the why is out of that and what it means for markets. jonathan: i totally agree. it is a bit of a mystery that lisa is keen to stay on top of, and i totally agree with her. two ways for a curve to flatten. at the front end we can get a selloff, and at the long end. to your yields have come back in, and this curve has carried on rolling over flatter because of a rally on tens. into november, we are rolling back over into the one 40's. twos-tens, that spread just

north of 100 basis points, back to 102. tom: they are all coming in. everything is adjusting in, and what is not working here is the word grind. this isn't a grind. it is a real adjustment. jonathan: a flatter curve is the theme of this market. that is the process at price action. hold that thought. we need to get some movers and sake good morning to romaine bostick. romaine: the broader market preparing for cpi wednesday in about an hour, but most of the individual movers are moving on the back of earnings here. on a percentage basis, down 9% in the premarket. a lot of this was expected. it was a drop off in volume, a drop-off in monthly users, a drop off and pretty much everything. there's a big concern about some of the mismatch we saw with regards to the drop-off in

trading volume and drop-off in revenue. it did not necessarily sink up, and a lot of people are trying to figure out why. it appears that some of the transaction value per transaction value might have been a lot lower here than what the street was looking for. a lot to parse for a company that a lot of people don't really know how to value. to the upside, you got doordash. they knock it out of the park. 40% plus growth pretty much across the board. a big acquisition of a fin nish delivery company. it will be the biggest deal in the food delivery business on record. lumen are -- luminar technology, in the automated driving and ev space, a lot of stocks moving on the back of rivian, priced well above what they had originally

started marketing shares at. this will be the biggest ipo of the year. that is going to start trading a little later on the day. software companies also moving on the day. upstart is a big disappointment, down about 24%. they are disappointing not only in what they did during the quarter, but the forecast was also light. to the upside, some strong moves higher. ring central up about .5%. and fiverr up about 15%. tom: what i want to do is emphasize two major stories going on right now. there's the specifics of cpi wednesday. on this guest, we have to start with cpi wednesday. but there's a whole lot going on at rabobank -- going on that rabobank is truly expert at. jonathan: let's start that was jane foley, head of fx strategy

at rabobank. with the incoming data, cpi this morning, it actually means -- what does it actually mean for the federal reserve going into next year? jane: to be honest, i don't think we will answer the question of whether or not transitory is gone, just by looking at today's data. if it comes in a lot weaker, maybe some of the less inflationary are going to say this is transitory, but i think where the answers have got to be in the wage inflation because it is only when we see wage inflation that we will be able to tell whether or not there are those second-round effects. one thing i think is going to be quite somatic for currency markets going forward over the next six months or maybe even beyond is that not all labor markets are the same. they are very different. you have more flux ability in the u.s. come up prep -- more flux ability in the u.s., probably more wage inflation. that is going to be really

important in trying to judge interest rate differentials and fx going forward. jonathan: most things are solved in comics with a calendar. just time. let it pass. for the chairman of the federal reserve, i wonder how much time is on his side and how much you balance what we see on wages, with pickup still below inflation in america, but the per dissipation rate is not. how do you balance those two things? jane: that is exactly the problem. in the u.s., you have a very flux of the labor market. the participation rate has dropped. people have fallen out of the labor market. therefore, we have seen wage pressures going around trying to find labor. if you go to a country like japan, it is not the same sort of labor market. firms tend to hoard labor. you don't have firms going around trying to find workers because they already have them. that is probably a situation mark into what we have in europe. so lagarde remaining quite dovish, expecting that inflation is going to be more transitory, maybe the answer to that, maybe

the differences in the labor market. similarly, in the liver market in australia, they haven't had the same reactions as the u.s. we are potentially going to see an interest rate hike, we think at the end of next year coming maybe around december, some people think it is going to come earlier. but that is not going to necessarily be the same dynamic that you see elsewhere. tom: for those of you on radio, and you can see it clearly on tv, jane foley is at the rabobank london desk. that is a desk of the netherlands. what is important here with the inflation argument is rabobank is absolute ground zero for the food industry hedging in the world. they own it from 1898 forward. you have a view of food inflation like not one single person we talked to. what do you observe at rabobank about food inflation, hedging,

and speculation dynamics right now. jane: to be honest, i would take that back into energy. a lot of food companies and manufacturers have been a real problem this year, so an awful lot of people are trying to hedge that energy, trying not to pass those costs on to the consumer, but they are probably coming. we are seeing that sort of inflation coming through, and this is why central banks are going to be cautious because even if wages go up, you've got food inflation or energy inflation going up by more than a pace, you're still going to have real wage depreciation. that is not the sort of thing that central banks hike rates into. this whole dynamic is quite complex and really quite fascinating, and i think that is going to be the situation next year, so more volatility at the short end of the curve. lisa: why isn't the dollar

stronger given the backdrop you just laid out? jane: i think there's a lot of good news in the price. to me, the june fomc was interesting because that is when we saw that big movement in the dot plots of various fomc members relative to march. that is when we begin to see the dollar rally. the dollar has really been on the front foot, rallying since june. it has gained ground. i think at this point in time, there's a lot of good news in the price. when you have a lot of good news in the price, how much more can the dollar go? you also look at a situation where we see risk appetite for u.s. stocks. you got the dollar gaining and risk appetite for stocks gaining, too. that is not a natural dynamic, and perhaps that is something which has maybe forced some of the bullishness out of the u.s. dollar as well. jonathan: what a fascinating moment that is. great to explore it with you. jane foley of rabobank. the height of the year on euro-dollar, january 6, and than

the story just faded. it is worth reflecting on this stuff. people were bullish, sure. they were right to be. we have talked about perhaps they weren't bullish enough, and that has been proved how this equity market has evolved through the years of our. the cyclical synchronized growth story and the dollar with the story didn't happen -- the dollar weakness story didn't happen. tom: i would look at dollar resiliency, and i wonder how that resiliency will play out in emerging markets, and again off the rabobank ask and their true -- rabobank desk and their true food and energy hedging expertise. i've got to think about developing markets and em. jonathan: d r.i.m. number how quickly we started talking about u.s. exceptionalism in q1? lisa: id remover that, and that was in tandem with the surprise as he dollar with strengthening. how long can exceptionalism be the story when we talk about labor markets?

can the u.s. diverge so meaningfully from the rest of the world? i wonder how you get strength of the dollar among synchronized growth. i am just scratching my head a little bit. jonathan: european equities still had a tidy year. just not perhaps the year people thought europe would have. the equity market down 0.2% on the s&p 500. the data at 8:30 eastern time, it is cpi in america. we will be catching up with bloomberg's mike mckee on the west coast, catching up with san francisco fed president mary daly a little later on. mike is going to join us to break down the data, then catch up with the fed official level later -- official a little later. this is bloomberg. ♪ ritika: with the first word news, i'm ritika gupta. the governors of michigan and eight other states want congress to improve aid for american

semiconductor producers area they are trying to ease the shortage that has hurt manufacturers, especially the auto industry. the governor and other congressional leaders are asking for $15 billion. the question of whether president biden's tax and spending packages fully paid for is getting questions. they have estimated that an improved irs could bring in more revenue. democrat moderates have been asking for a cost analysis. those inflation risks are building up in china. the producer price index rose 30.5% from year ago. meanwhile, the consumer price index is up 1.5%. consumer prices and china have been rising rapidly in the past few months. doordash has agreed to its biggest purchase ever come a

buying a finnish delivery company. this as doordash posted a 40 high present revenue in the quarter. a british retail chain raised its forecast again thanks to strong food sales and a recovery and clothing demand. the ceo warned over rising cost pressures and says there are still supply chain problems. global news 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i'm ritika gupta. this is bloomberg. ♪

>> these business will be more focused. they will be a greater level of accountability. we should have sharper capital

allocation, more strategic >> ability, and it is going to be good for the team as well. i think we will end up with investor bases focused on these pure plays, investors that are probably under invested in ge today. you put all of that together, it is clear that this is the best path for us to unlock and create value. jonathan: ge breaking up into three. it is larry culp, the ceo of general electric. cpi just around the corner. 42 minutes away. knowing into that, equity futures down 11, they give 0.2% -- down 11, -0.2%. eight days of gains going into yesterday. a little bit later after the close, earnings from the walt disney company to wrap up earnings season. tom: it is a different disney. i guess they are waiting for "mende lori and -- for "mandalo

rian." did you watch? jonathan: i did not. tom: should we talk to an expert? michael nathanson, senior research analyst at moffitt nathanson. i want to talk about disney on this profit call and the fear they have over the streamers. i've talked to apple and coverts goodie, doubling employee count to 3000 something. netflix with 300,000 square feet, they've got a million square feet in l.a. how scared is disney about the new streamers joining them in l.a.? michael: i don't think disney is scared about competition. i think disney is going to be focused on how can they accelerate their growth because in the past couple of quarters, it has been a slowdown in disney plus. i think there is enough room for disney. they need to talk to us about what they are seeing, why there is a slowdown, and what they are

going to do about it. tom: ok, what are they going to do about it? disney is here. they coming out of a pandemic. they've got people at shanghai disney, with covid and all that. is it a massive opportunity coming out of the pandemic to buy pandemic affected disney? michael: we are truly neutral because i think the stock last year more than compensated for the streaming opportunity, and for the past 12 months or so, it has just been treading water. our thesis is they need to spend a lot more money on content. there's so much great content available that the only way you get subs at this point is by spending money on content to try to have a breakthrough hit. in order to grow further, they need a lot more content. they have to have that flywheel spinning faster. jonathan: they've also got to

consolidate what they own. i know you are focused on this. how do they leverage hulu? what are you expecting them to do in the coming months and quarters? michael: lisa: hulu -- michael: hulu is between them and comcast. in two years, they have the right to buy it back. think they would be smart to buy it back sooner and try to create a more unified disney bundle. hulu is on its own app and disney has its own app. you put them together and create one single application, and basically tried to push more people to the bundle. they have to buy it from comcast. i am sure they are talking with them now about it. it is not going to be cheap to do it. but what we've found in the research is that disney+ is not well penetrated among older viewers. it has done well among kids,

families, fans of their content, but the older viewer that is not a disney fan, they need to do more, and putting it together with hulu more closely probably provides penetration. so we are expecting something in the next two years before the timetable is up to try to consolidate the position. jonathan: is this for a slice of a bigger pie, or could that be, i hit -- i hate this term, the net fixed killer, but could they -- the netflix killer, but could they diversify be on that point? michael: netflix is a base consumer choice, as time goes on, we are seeing more people adding more services on top of netflix. content is not monopoly. that is into possible -- that is impossible to have a monopoly position on content. in plaques pricing power, may be

the cost of doing business. so ultimately, more competition i would think would have some negative impact on netflix's ability to raise prices and to compete, but the past 12 to 15 months, the pandemic has really slowed down the ability to compete because you had a good 12 month slowdown was no content produced, and networks had a massive advantage. for us, the next one to two years will be a catch up on all the spending that couldn't be done during the pandemic. lisa: when you talk about the fact that disney+ hasn't really penetrated the older individuals, are they fully penetrated with the younger households, with those that have children? michael: i would say no. netflix is 60% penetrated pro-seaboard -- penetrated across the board. there is room to go across the core demo. but then it drops off dramatically, so there is upside

. they may have to expand past the core. that's is what we want to hear about. jonathan: before you go, what was meta-about? we haven't spoken since then. [laughter] michael: by the way, we have a buy on facebook. meta is about a world in which facebook could try to have more control, believe it or not, in the world that they have now -- in the world than they have now. it will be commerce, communication, games, and facebook is trying to basically be positioned in that world. we have done some work on this. we cover the game industry. we think gaming will lead. i am not sure that facebook actually has the position they want to have in this business. the other thing is the way to take a ton of investment

dollars, classify it, and we cannot separate that from the core facebook earnings number. you can say, look how cheap facebook is. the core business is actually a lot more profitable than you think. but we will talk to you in five to 10 years about meta. we don't value it at all, but it has helped us clarify the valuation of core facebook. jonathan: i look forward to it. it is a world where politicians and regulators want to sit around the table and share a drink. michael nathanson, thank you very much. i have been very snarky about it. shocker. for me, i was just trying to really divide whether this was a pr effort to get away from the facebook name which is toxic for summative people, or whether it is something bigger. tom: i don't have a clue. what i saw at the beginning, he described a record business 30 years ago. the streaming business to me seems so much like the record business of the 1970's. jonathan: more still to come.

tom keene, lisa abramowicz, and jonathan ferro. cpi wednesday, if we haven't told you already. tom: it was going to be meta wednesday, but we decided not. jonathan: equities softer, -0.2%. this is bloomberg. ♪ ♪

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>> this idea that we are going to continue to compound earnings at the rate that we have is just fantastical. >> you have to see some real robust growth for much higher rates to be acceptable. >> the fed is navigating the most difficult period in its history since the volcker era. >> prices are going to be higher and wages are also higher. >> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. tom: