♪ >> the bond market seems to be pricing in a hawkish fed, but the equity market does not seem to be doing that. >> i think the fed is trying to inject risk into the market they will respond. >> we do not have the experience for markets to calmly go through a tightening cycle. >> overall policy remains accommodating. >> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. tom: good morning, everyone. a simulcast from our studios in new york, altogether again.

we welcome you on radio and television. it has been a softer market today, and suddenly the market is moving. a real deterioration in the tape. jonathan: the nasdaq 100 down 200 now, -4%. if the fed funds rate needs to peek 3%, 4%, i think it is fair to say we are not done here. right now, 1.76 92%. tom: you need to stay with us for the next 10 minutes. rj gallo with us on fixed income, francisco blanch scheduled to join as well on $100 a barrel oil. the zeitgeist over the weekend, you were out front with the nasdaq leading the way. suddenly a deterioration. it is because of what dudley said? jonathan: i don't think it is because of what dudley said, but

i think what dudley said as part of the overall conversation. when we think about tighter financial conditions, that is not an undesired fallout of what we are talking about here. that could be an objective for the federal reserve. that is different. tom: pushing against the caution is if you do get higher yields, global finance will step in and buy america. those auctions are actually more important now as we move into january. lisa: you are getting excited about the bond options -- the bond auctions we have coming up. i am still trying to get my head around a 3% to 4% fed funds rate, and the idea that the rate would have to be the highest inflation rested at 2.5 to 3%. how does negative real yield play into this? how does that global backdrop of demand you were talking about play into the likelihood of treasury yields getting back up to what they used to be decades ago? tom: breaking news, and this is

just a tea leaf and the idea of a new rate regime. you see the central bank of romania, the numbers don't matter, but the answer is they go up in rates. jonathan: from 2% to 2.5%. that is the direction of travel for most central banks. to lisa's point on the rates market, negative real yield is part of the issue for the likes of bill dudley because they are so deeply negative in real terms, it means they got more work to do. if you believe the fed needs to do some thing about inflation, they need to get to a positive real rate, and they need to get there quicker. i want to be clear about the words of bill dudley. he has been calling for this for the last six months plus. i remember talking to him going into the summer, and he raised this is a key risk. when the fed has to move, they will have to move sooner and quicker and take it to a place that people aren't thinking about, and they are still not thinking about it. that is an outlier call that the fed funds rate gets anywhere near 3%, 4%. most people somewhere between 2% and 2.5%. tom: vix 19 level, just breaches

21, showing some of that morning tension. jonathan: the nasdaq 100 down more than 1%, -1.25%. in the bond market, yields did breach on tens 1.80% briefly. came back down to 1.7674%. but we have taken out last year's highs. we have done it really quickly. started the year at 1.50%. had a 25 basis point move last week alone. tom: it will be interesting to see. we start strong this hour. francisco blanch scheduled to be with us. rj gallo joins us right now with federated hermes. you are in the fixed income space. are you steeled for a bear market, price down, yield up in your world? rj: yes, we are. we have been short duration for well over a year to significant degrees. we have found that the simple fact of the matter was that inflation was too hot for the fed's transitory argument.

that argument has largely ended. the fed has done a significantly hawkish pivot. we now have ex-fomc members talking about where the fed may have gone wrong. jonathan: 3% to 4%, the range bill dudley is talking about. you heard it. your reaction? rj: pretty striking. it is well beyond consensus. i think it is hard to fully know. i think the fed might have made an error in the fundamental change in their framework in the midst of a hurricane. when they went to clickable average inflation targeting, which was inherently dovish, the world was facing greater uncertainty around public health than in 100 years. you think about the inflation dynamics, the evolution of the public health crisis has really driven the inflation dynamics at the same time the fed was trying to boost inflation as well. maybe you look back and say that

was the big mistake. we will see where we go now. 3% or 4% sounds really high. quite possible that with so much debt to gdp in the u.s., it won't take as much hiking as it would have 10 or 15 years ago. upward is the trajectory. bearishness in high-quality. jonathan: that is why it is so difficult. you have the likes of bill dudley saying federal funds, -- maybe there's enough tension in this market to cause a bit of a problem. how on earth do you come up with a forecast for 202022 with that in mind? rj: i think it is very difficult. all forecasts have confidence intervals. i think from a directional standpoint, a higher treasury yield, eventually tighter financial conditions, the minutes were as hawkish as they

could have been, and my opinion. when you consider that the i with rooms he members -- the fed fomc number's are now talking about balance sheet reduction to prevent the curve from inverting , you're talking about yet another innovation in the fed's thinking. qe was never about trying to target the yield curve. now they are thinking about the evolution of their different levers and the objections they can try to hit by moving those levers, but they are obviously hawkish. the fed is worried about inflation. they feel they might have lost control of it, no they have to think about the different levers they can push and pull to try to manage that, and balance sheet reduction is clearly on the table. lisa: financial markets have to cooperate. does that mean another taper tantrum, or to build at least point, is the fed put dead? rj: the fed put his farther out

then it historically has been. i think the fed is not looking to tank markets, but they are certainly looking, and they always do monitor the provision of capital and the price of that capital in the economy. at this point they need those variables to ratchet back a little bit. it is hard to do so artfully without potentially causing a disruption, but that does not prevent them from attempting to have a softer landing and financial conditions. right now they are too stimulative in the economy, and inflation is too hot. lisa: i am looking at credit markets, which have been one of the tools of transmission of said policy, and i am looking at yields on investment grade bonds of about 2.5%, a little bit north of that. they have come up quite a bit, but still so far below what people think the end rate for inflation may be. kind of credit disruption are you expecting if the fed does pursue a much more hawkish policy? rj: the risk of a disruption is

obviously accelerated. the simple fact of the matter is fundamentals remain strong. corporate earnings are great. default rates are minuscule. all of the ingredients with suggest stay positive on credit. as a firm, we have dialed back some of our overweight credit bets, both investment-grade and high-yield. still somewhat optimistic on the high-yield front. i think the fed is walking a tight rope to some degree. they need to talk tough to help control inflation expectations. they have to try to engineer a situation where ultimately tightening does not cause excessive tightening of financial conditions. the jury is out on whether they can walk this tight rope. i think history suggests we should be skeptical that we will be able to do so without some increased market volatility with the spread backed of tantrum like behaviors at certain

points. that tantrum could be in rates. that tantrum could be in risk assets. 2013 risk assets did very well while rates spiked. it doesn't have to be a rerun of that. quite possible for the debt picture, and there's a lot of debt out there, might mean that the restraint important to him the economy by basis point tightening is greater now than then, and risk assets become the liver to watch, sort of like 2018, when the fed was tightening and the stock market finally cried uncle and fell 20% in the fourth quarter in 2018. jonathan: rj gallo of federated hermes, thank you. if you are just tuning in on tv and radio, moments ago with caught up with the former new york federal reserve president bill dudley. lisa, it has only just begun, the world to bill dudley. lisa: he is basically saying we need to do a lot more work and there is not the fed put that

many people are expecting. what we have heard it's a number of different strategists saying they expect the fed to step in perhaps after a bigger selloff than people are comfortable with, but will they selloff at all, especially if the markets are as resilient as they have been? jonathan: you can't remain in the fantasyland of a dovish forecast indefinitely. some really powerful words from bill dudley this morning. tom: i think that is the point this morning. i have never seen a note like this from a former officer of the federal reserve. it is a forceful note, and direct. jonathan: a bit of news on novak djokovic. djokovic's released. he was training on the tennis court. this according to his brother. people have been following that closely. i know tom is doing something us right now, playing wordle. tom: come on, anne-marie won. the word was ferro. jonathan: this is bloomberg. ♪ leigh-ann: with the first word

news, i'm leigh-ann gerrans. formal talks between the west and russia began in geneva today. president putin is demanding security guarantees against nato. potential for russian invasion of ukraine is persuading the u.s. and europe to focus on long-standing complaints. the u.s. is pushing its allies to consider stronger sanctions on russia. goldman sachs is forecasting that the federal reserve will probably raise interest rates what are times this year. a research note also says the central bank will start its balance sheet runoff in july, if not earlier, and it is december meeting, officials signaled they were preparing to move quicker than last time they tightened monetary policy. omicron has spread in a port city that borders beijing and spread inland to an official. that brings the variant of the doorstep of the capital less than a month before the winter olympics begin. officials in the city have told the 14 million residents not to

leave town unless it is essential. a big take today in the videogame industry. take two interactive has agreed to buy zynga in a cash and stock deal valued at about $12.7 billion. that represent a 64 to zynga's closing price friday. take-two is behind the popular "grand theft auto" games. zynga is responsible for "farmville." i do love those. 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 leigh-ann gerrans. this is bloomberg. ♪ ♪ jonathan: on tv and radio, live from new york city, for our

audience worldwide, this is "bloomberg surveillance." we are down 30 on the s&p, down 0.7%. the big movers and the nasdaq, the nasdaq 100 down 1.95%. crude comes in a little bit, down 0.5% to $78.51 on wti. the team at bloomberg writing this up on the hedge fund manager, a 71% gain in 2021. just unreal. tom: it really speaks to when you get it right. leverage comes into that as well. we have to forget in the gloom of active management, the gloom of hedge fund outperformance, there are some winners jonathan: one of his -- there are some winners. jonathan: one of his funds unreal after the move we saw in crude last year. particularly the energy story

in europe. it is complicated things for policy makers the world over. tom: we are going to focus on what you want to know, which is the price of a barrel of oil. francisco blanch takes it down to the micro theory of companies , mines, production worldwide. let me start there and save the glory for lisa and jon on $120 a gallon brent crude. what do smelters do at aluminum plants given the francisco blanch call? what is an aluminum producer supposed to do? francisco: thanks for having me. what we are seeing now, and we have seen for some time, is the fact that the chinese are very focused on curtailing the energy density of its experts. for the longest times, for 25

years or so, we have lived with incredible cheap chinese exports driven by cheap labor, cheap capital, and cheap energy. i think the chinese government is increasingly focused on climate change and also focused on turning around its energy economy, which in turn, as you just pointed out, is impacting the price of aluminum quite severely. we are bullish aluminum this year. part of it, largely, is driven by the increased energy costs. so a smelter, if you are in china, you're supposed to pair back production, but the same goes for europe, but ultimately aluminum and lots of other energy intensive commodities are heading towards north america, the world's energy haven from a cost standpoint. lisa: you came out with a call

last year for $120 a barrel oil. oil prices were climbing very significantly. since then, it has cooled a little bit. do you still think that is the pace of travel, that is the endpoint based on increased production from opec+ and the fact that we do have this omicron kink reducing demand temporarily? francisco: we have seen cases peak in south africa and the world now pretty meaningfully. i thick a lot of medical experts , a lot of people in the field are calling for a peak in europe and the u.s. within the next month. the big question in terms of our call is what happens in china and whether the chinese government can maintain the zero covid tolerance policy, which is leading to lockdowns in different cities with something

as contagious as omicron. that is the biggest question around our call, but we still think triple digit oil is within the works heading into a second quarter. we see demand recovering quite meaningfully, and one thing we have been noting for a while is that opec supply, opec+ supply, is likely going to start leveling off in the next two months. remember a lot of russian companies have not been able to meet their export quotas, and russia has been the main supplier of incremental barrels. even then, we think russia's energy supply will level out within a month or so, and then it is really just down to saudi arabia and, rids to produce increment oh for the world market. it is going to be a tight 2022 as demand recovers here. lisa: i want to start with china and the zero covid policy. can you give us a sense of the bifurcated outcomes to your call dependent on whether they try to

stick with it or give it up and try to adapt to a more open type of policy? francisco: i think the big question mark for everybody is what happens for the winter olympics. we are a month away, and many people, me included, which are not necessarily experts, question how you can run a zero covid tolerance policy under this influx of athletes from around the world, and diplomats and everything that the olympics brings with it. so i think, assuming that there is some relaxation of the policy will see contained -- will see continued growth in demand, but china's 100 million barrels a day is the second largest consumer in the world. it is the number one oil importer in the world, so obviously a strict lockdown in china broad-based will lead to

many down flows, so we are keeping a close eye and that is the main risk to our view at this point. we think iran is less of a challenge given what seems like a resolution to the iran scandal that is looking more likely by the day, but those are the two main risks. tom: forget about all the wall street chit chat. what does triple digit oil, triple digit aluminum, triple digit live cattle, what does all that mean to us out in the real world? how was the world going to change with $120 a barrel oil? francisco: what is going to change is it is going to force the fed to tighten policy a little faster than the market was anticipating. i think four hikes this year is pretty much baked in.

i'm a little more worried about the balance sheets runoff, partly because what we saw back in 2018, back in the day we wrote extensively about this in our process publications, and we looked at the impact of that on pieces. i do believe that the fed balance sheet has a huge impact on asset values. may be less so in commodity values, but we saw a big selloff in commodity prices after the fed started to compress its balance sheet. that is what it means, that the fed is going to be having to press a little harder on the brakes, and of course, we know that the big forces of demographics and technology could come into play any minute. so it is a difficult job for the fed to slow down the economy, to bring inflation back down to 2%.

they could overdo it, and that is i think the big risk we are looking at into the second half of 2022, and i guess the first half of 2023. what everyone has got in mind over the next six months. lisa: can you give us a sense of the pace of that increase to triple digit oil and what the trigger could be? francisco: the trigger is going to be primarily competition between gasoline and things like diesel and jet fuel. generally, when you have two big forces in your market, trucking and flying, coming together and clashing with this backlog of incredibly high global gas prices creating substitution into oil, that could be the trigger from a demand standpoint. remember, the incremental barrels saudi arabia can bring into the market, i won't get too

technical here, but they are hurdle to refine -- they are harder to refine. so they will have to work twice as hard to bring the gasoline and diesel market once with incrementally heavier barrels that are harder to refine. that is what we saw into thousand eight, and that is why we remain quite bullish on oil heading into the summer months. plus, there's the big pent-up demand story. i think we all want to go around and see friends and family and visit places, so the pent-up recovery and services i think is going to be quite spectacular once the omicron wave fades, and assuming there's no third or fourth or fifth transformation of the virus here. jonathan: you mentioned the back end of 2018. i think a lot of people set up when we heard that because we went down in q4 of 2018, a big downdraft. it feels different this time when i look at the screens.

everyday, yields are up and equities are suffering. crude is resilient. can you walk me through the dynamic now compared to the back end of 2018? francisco: i think it's different just rate hikes are different the balance sheet compression. interest rate hikes do not tend to slow commodities down in the early stages, and we have seen that repeatedly. commodities are late cycle performers. inventories right now are very low for crude oil and many other raw materials, so it tends to happen in fed tightening cycles is the first few hikes are less impactful, and then as you get towards the end of the hiking cycle, that is when things tend to roll off. the second half of 2018 was the end of the fed tightening cycle, and that is why we expect this time around, except for the fed seems to be trying to accelerate

everything a little more than they did back then. back then we were very gently hiking rates. now things could happen a lot quicker. so we do expect a lot of volatility in 2022, and i think that is true for all markets, not just commodities. i think it is true for equities, true for fixed income assets. we will see a fair amount of vol, and i say that is part of my role in the business, so we do think volatility is going to be extremely high this year compared to other years. jonathan: thank you, as always. prince go blanche of bank of america. the triple digit crude call for later this year. tom: it is a foundational call. i really want to point out that even though we have had not a gloom discussion today, but certainly we have been led by bill dudley's comments, the idea of a higher interest rate regime, there are some people really pushing against that, including deutsche bank on oil. jonathan: the conversation continues here on "bloomberg surveillance."

coming up, the chairman and ceo of pfizer. that company announcing a series of research collaborations this morning. we will get into that, and the latest on the vaccine. we are down on the nasdaq almost 1%. from new york, this is bloomberg. ♪

[applause] jonathan: what a start of the wake in financial markets. ahead of michael mckee, let's with through this price action, down 28 on the s&p. on the nasdaq 100 down 178. down more than 1%. in the bond market were exciting earlier on. back down to 17763. we have to start the conversation with where we took

it 30 minutes ago, to see the former fed officials talking the way they are talking. this farm blue bird opinion. the federal reserve needs to be hawkish. talking about a range of 3% to 4%. 3% to 4% is not part of the conversation. one of the company is the need to this is pfizer. the chairman of pfizer joins us now. fantastic to catch up with you. led by the research collaboration. expanding the mrna effort. i want to understand why the partnership instead of straight acquisitions?

albert: sometimes being a good partner provides better results than your own company. right now we want to place multiple bets. we have proven this works very well. i would not say it you do not see acquisitions, but in these specific areas we have found's partnerships give us what we want without capital meeting. -- jonathan: what does that mean for capital allocation elsewhere if the strategy is a series of bets -- albert: clearly the number two priority is to invest a lot of capital allocation, either through the normal course of business or through covid.

that needs to be an investment in science. -- we have a developed machine. all of these platforms -- jonathan: let's talk about the platform getting the most attention. it has been meant with hope, confusion, and skepticism. i'm trying to understand how you communicate the hope around this when we keep getting told we needed of that shot. if it is so good, why do i need a second, third, fourth? albert: let me say what i think about mrna. it is very powerful technology. it is a powerful technology that has produced powerful results. our strategy and our business is

to harness the power of this technology. the first area is self-evident in the lowest hanging fruit. it is infectious disease. this is something we are doing, mainly in partnership with biontech. you said why is it good it is not producing longer-lasting results. it is not related to mrna, something related to the virus. as you probably know, the natural infection of this virus does not produce immunity. the national infection sometimes produces half of the time you can get in terms of how long you are infected. then there are vaccines. so it is not right to say the mrna does not create durable protection in the virus that is

very difficult to tackle. it is not the only area mrna can help. cancer is another area. we are having significant efforts in the world and in government. another area we announced today in partnership are the diseases, they have a mistake in your dna. genetic mistakes. something is long -- is wrong with your dna. as a result we have a disease. what we want to do with the vaccine editing technology as a target that will be able to correct this mistake. there are several genetic technologies. without the base is the best --

this is why we did this. we are having other deals announced today that will help us improve even further. license for 10 different targets -- a lipid is used to transfer the rna. last, it is the covax technologies. they are creating dna instead of biological manufacturing -- the bottom line, what does this mean? instead of having the process for the production of our mrna vaccine, instead of one month, we can take it down to a couple of days. this is their important because imagine -- this is very important because imagine you

can have a new variant. instead of great new variant vaccine in 100 days, you do it in two months rather than three months. instead be able to create the flu vaccine that you are six months or five months ahead of the target, now you are three months or four months before the season. very important technology that will allow us to solidify this variant and to deliver to the world but they are expecting from us. jonathan: your running down the clock so i have to jump in. a story about -- "i am pleased but judged overturned my visa. i am pleased to compete in the australian open." he got that by having your previous infection. i wonder if having a previous infection provides to -- similar protection equivalent to a

vaccine. albert: first of all i'm a fan but i cannot go to this dispute if he has documentation or not. this is a link between the authorities and their doctors. i think previous infections are in general protected against infections for a period of time. the comment i made was that in a lot of european countries the validity of the certificate of vaccinations is six months. now for infections it goes to three months. the protection you are getting after an infection does not last as much as the vaccine. this is what i said. jonathan: can you talk about margins on the vaccine as compared to the oral pill? what is the difference? albert: the difference is big because we own the process and

we do not have any -- we are having 100% of economics. margins are big. jonathan: final question. you have set up a strong stream of recurring revenue with this vaccine rollout. you are being insulated by government policy the world over. do you worry about the pr fallout from that, the backlash you could get, making money off of the vaccine that has now been mandated in many places, being insulated, having revenue stream insulated by governments around the world, do you about fallout from that? albert: i understand the meeting -- the meaning of insulated. if you have the belief it is appropriate for the private

sector to be entrepreneurs and produce product medicines they can get some profit out, i cannot think of a company that we deserve it more to make money other than the company that did so good with the money. i'm very proud for what we have done. i'm very enthusiastic that this example will create way more risk-taking for the industry but will result in way more breakthrough products that would save more lives. jonathan: a ton of issues we need to cover in the future. we appreciate your time this morning. albert bullock -- albert for luck on some of the big -- albert bourla on some of the big issues in his world. tom: what is next variant? omicron fades away and then

there is another variant? jonathan: and then we need another shot. a pr question. you feel it is an uncomfortable situation. tom: that is true every time. this goes back at least to world war ii. it is something that will manage. i'm curious about the new pfizer versus the pfizer of old and how he will lead the company forward over the next five years. jonathan: next time. tom keene, lisa abramowicz, jonathan ferro. the s&p, we are down .5%. on the nasdaq, down a little more than 1%. yields reaching 1.8 briefly. we will talk with stuart kaiser in about 20 units. -- in about 20 minutes. this is bloomberg. leann: inflation in the u.s. has

hit the fastest pace in the last four decades. the consumer price index comes out on wednesday. it is expected to rise 7%. that helps explain a shift in the federal reserve approach to monetary policy along with more consumer anxiety about the economy. in kazakhstan security forces backed by russian troops are restoring control after crushing demonstrations. the government says almost 6000 people have been detained. according to state tv 154 people were killed. the real number is thought to be higher. novak djokovic says he is grateful the council overturned the decision ahead of the australian open tennis. he tweeted a picture of himself and says he is determined to stay and compete. the australian immigration minister is considering whether to revoke his visa yet again. novak djokovic believes he has a

medical exemption despite not being vaccinated against covid-19. meta-platforms has leased well be the biggest skyscraper in the city of austin. the company has 2000 employees in austin and is looking to hire more. both samsung and tesla have announced plans to expand in the same area. the ceo of for ari is putting the italian company on track for electrification. for ari -- ferrari has also been slow to embrace factories. its first full electric car is not scheduled to debut until 2025. global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. ♪

>> the federal reserve has a

very benign forecast relative to what is happening on inflation. if you look there forecast, they've inflation melting away to 2.1% in 2024 even though they do not -- the end of 2024 the federal funds rate is 2.1%, below what they think about neutral. how does the inflation magically disappear? tom: william dudley with the must lead -- a must-read for global wall street essay for bloomberg opinion. a forceful note, rates higher and more persistently higher, may be starting out slow but then getting to it. all of that devolves down to what you will do with your marginal paycheck. marty berger is expert at this, the chief officer of silverstein properties, one of the great landlords of new york city. i will cut to the chase. i did the silverstein properties map. i went to a property, there are 416 units, there are two

vacancies, how much will rent go up this year when the math says there are 414 apartments rented and only two empty? marty: that is a great question. thanks for having me. we just purchased this property the end of december and it was 99% occupied. we are hoping to see rental growth in new york city is on a comeback. we have a larger portfolio in new york city, a couple of thousand units, and that portfolio went down to 68% occupancy when we were in the 98% range, then the whole portfolio came back quickly. tom: that is great. lisa from the upper west side emails is and says you did not answer tom's question. are reds going to go up 2% to 3% , or are we going to see 10% rate increases? jonathan: i think rates all -- marty: i think rates already did

go up. i do not think they will spike as much as they did. lisa: what about in the office space. we are talking about people who come back to the city. you can see all of the empty storefronts. are you still optimistic you'll see all of those offices filled, or will they get repurposed into condos? marty: i do not think you will see as much offices being repurposed into different things like that. offices will come back, people will occupy the offices. i think it is slow to come back with all of the different variants. we started to see them come back in october and november. the delta variant had slowed it down and it started to pick up again. omicron is slowing it down. this year you will see a pickup again. lisa: one theme of new york city has been it has rebuilt itself again and again figuratively and literally. i wonder given the omicron variant, given how much the

pandemic has rejiggered people's notions of work and play, are you still building on -- are you still planning on building the world trade tower you have been holding off on? marty: we will definitely be building two world trade center and the market will demand it. we are seeing higher rents downtown. $125 a foot. the three world trade center building is almost completely built and that was the last of the new buildings to be built downtown. we are happy with the energy and demand going on downtown. lisa: there is been a huge shift to suburbia and other smaller cities and frankly, to florida, how much does that have legs or do you feel that trend has been peeking as people realize they miss their lives? marty: the corporations want to be where the talent is and the talent wants to be in big cities. i think you will see the

corporations back to the big cities. that is why you will not see users -- i think people be using space differently but they were still be using a lot of space. all of the talent that wants to be in the cities, because that is where all the services are, i think they will continue to thrive and i think the office space will continue to be built. tom: you've been in both sides of the estate world, gathering funds now investment at silverstein properties. give us the window into the effect of the big tech companies. today's headlight is facebook in austin, i do not know if that is your unit, but buying -- i think the square footage is about the size of rhode island. help me with the big tech companies and how they changed your world and our world. marty: it is interesting. tech companies in new york do not want to be in glass and steel and now they are in glass and steel. we have uber and spotify in the

three world trade center and four world trade center. tech companies need to be everywhere. they cannot just go to austin and find 7000 people because they're not 7000 new people to find in austin because their people moving to austin every day. the need to go to the bigger markets. that is why you will see facebook expanding in larger markets like new york and boston and chicago so they will seat tech thrive in bigger cities. lisa: throughout the show we have been talking about the new rate regime we are heading into. the fed will be forced to be much more hawkish and raise rates significantly, with bill dudley saying the fed funds rate should probably peak at 3% or 4%. what would that do to your property world? marty: we've spent the last year refinancing all of our property assuming rates will go up. with the rise of rates we will also have the rise of rents.

when we are underwriting we are assuming rents will go up. that is what is happening with inflation. tom: marty burger with silverstein properties. thank you so much. i would suggest an adjustment in the market over the last 60 minutes. lisa: you have seen a deterioration as people try to understand what it means for the fed put not to necessarily be there and a new rate regime. the number of strategists re-triggering their calls for faster rate hikes is shocking. tom: you see the vix to a higher number, we get over 20, 21.04, not a big number but a migration from the 16 or 17 level. what did you think of the comments of mr. burger. they are supposed to say

measured real estate rental raises. baloney. lisa: no doubt one of the reasons people are worried about inflation is because of the rent that lagged behind some of the prices we have seen on housing. that is going to increase. you will see rent continue to increase and that is one of the reasons why the fed would like to pull that market. what is the consequence? tom: how do they call it? -- how they cool it? lisa: if they make it more expensive to borrow people will not be able to spend as much, you could potentially get that trickle into a dampening it to how much rents rise? how quickly could they do that? that is one component in a multifaceted picture. pretty broad-based. tom: whether it is the boom in los angeles from the streaming money or new york city. what i heard from marty burger is the resiliency of

the city experiment. stay with us through this day. you have to stay with us to the market. nasdaq down 1.3%. this is bloomberg. on radio, on television, good morning. ♪

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jonathan: the second trading week of 2022. futures on the nasdaq deeply

negative. "the countdown to the open" starts right now. >> everything you need to get set for the start of u.s. trading. this is "bloomberg: the open" with jonathan ferro. jonathan: from new york, we begin with the big issue. more hikes for 2022. >> four rate hikes on the table. >> all of these changes on rate hike views. >> the march rate hike is definitely a go. jonathan: you're getting -- >> you're getting tapering, you're getting rate hikes. >> four in the space of 12 months is a change to the monetary stance. >> unfortunately the fed is having to hurry up because it was late starting. >>