♪ >> the aim of the fed is not an unintended consequence. what they're looking to do is tighten financial conditions. >> they need to do at least four or five rate hikes this year. >> right now they are too stimulative, and the economy, especially inflation, is too hot. >> we don't have a really good experience for the ability of markets to calmly go through a tightening cycle. >> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. jonathan: chairman powell just a few hours away. good morning. this is "bloomberg surveillance ," live on tv and radio. alongside tom keene and lisa abramowicz, i'm jonathan ferro. your equity market up 14 on the s&p, up 0.3%. even if the outcome is clear for chairman powell little bit later, this could be a heated exchange on capitol hill.

tom: twos-tens spreads very carefully here. i am watching the bond market. i wonder if it is front running where powell will calm the inflation storms. i am not predicting that. i just wonder how the market is gaming get into 10:00 a.m. this morning. jonathan: also going into cpi tomorrow, 7.1% is the median estimate in our survey so far for headline inflation. lisa: people are baking in three rate hikes, possibly four for 2022. we have seen the buy the dip come in. how much is this predicated on the idea that people do not want to see markets selloff too much? jonathan: to bill dudley's point yesterday, he's not just saying let's go. let's go hard. that is the difference between

deadly and the federal reserve at the moment. tom: -- between dudley between dudley -- between dudley and the federal reserve at the moment. tom: bill dudley saying this is a serious issue. they've got to get out front. just getting going is not enough. he's looking at 45, dare i say seven increases down the road -- four or five, dare i say seven increases down at the road. jonathan: he is saying they need to push four. it is just not part of the conversation right now. tom: i don't know what david bianco will say. there's a lot of different opinions here. jonathan: your equity market up 16 on the s&p, advancing 0.3%. yields unchanged at 1.755 1%.

the made event yesterday was the turnaround and the nasdaq, down around 3%, then back into positive territory. up again this morning 0.5%. lisa: we were talking about that earlier this week, when do the pockets of pain turn into or broad-based risk aversion? at about nine: 12:00 a.m., jonathan ferro will be -- at about nine: 12:00 a.m., jonathan ferro will be interviewing -- at about 9:12 a.m., jonathan ferro will be interviewing loretta mester. today, fed chair jay powell is center stage for the senate confirmation hearings. how much does he reiterated inflation as the leading issue? how much does he said they want to see a market disruption in order to transmit their policy? he talked about using tools to

support the economy in a strong labor market and to prevent higher inflation from becoming entrenched. how much does it speak to the wage spiral, the wage price spiral we heard about? the treasury department will sell three-year notes at a time when yields are at the highest level going back to february 2020. how much does the international buyer come into play throughout the globe? if they do not come in in a more meaningful way, do people rejigger their sense of how negative real yields can remain for the foreseeable future? jonathan: looking forward to the conversation with the cleveland fed president. michael mckee joining me to help lead that conversation. the interplay between the balance sheet and rate hikes is something we sent i have been talking about through the year so far. tom: it is important with mes ter, the mathematician.

first you have to ask about what she's going to do about the cleveland guardians. i'm really interested in what she says about that a dependency. jonathan: i since she does not want me to ask her about the cleveland guardians, tom. david bianco, cio of dws america's. i think most of the audience is thinking, don't ask her about that. let's start here. david: good morning, everyone. jonathan: this cycle is moving so quickly. what do you make of the speed of? david: the speed of the cycle is quick. it is a rapidly aging cycle. the cycle is two years old. this expansion is two years old. i have used the expression it is going on seven, and as you know, 7, 8, 9, 10 is good old age for an economic expansion. but throughout this new expansion and this new bull market, it has been a very difficult market to knock out. we saw that again yesterday. we had a selloff in the morning.

by the end of the trading day, it seems like nothing really happened. these two powerful drivers of this equity market have been earnings and low interest rates, and now the conversation is really about the sustainability of low-end negative real interest rates. all eyes are on the federal reserve right now, and the views on how many times the fed needs to hike this year into next year, that is a view that is in motion at dws. but yes, there will be more hikes than previously thought in 2022, but the issue is not so much when the fed hikes or how many hikes in 2022. the issue is really how high does the fed need to go in 2023 or even 2024 to bring inflation back to 2%. lisa: is it simply to slowly tighten the screws at a controlled pace, or is it to actually disrupt markets?

how much is your constructive you that it is on the former, not the latter, that they will actively try to cause a selloff? david: it is not so much about disrupting markets for the equity market. i don't think the fed would be opposed to a 5% or 10% dip in the s&p 500, and i think a 5% dip is very likely from the highs about 4800 on the s&p. i think what the fed is up to is signaling that they don't like these entrenched inflation expectations. they are trying to wrestle with what is a fair shift in the labor share of the economy, from the profit share of the economy given the tightness of the labor market, versus accelerating wage price spiral. that is one of the things i want to be listening to the fed speakers about. what is a fair shift in wages versus rita getting -- versus

mitigating a wage price spiral. one of the most powerful transmission mechanisms of monetary policy is exchange rates, and if the fed needs to hike the overnight rate above 2% in 2023, then in our view is that the fed funds rate stays below 2% in the next couple of years, but if the overnight rate needs to go to 2% or higher, that will make the dollar stronger, and that will give the of us economy access to global resources, including the global labor market, and you will see the prices of many of these inputs, commodities and goods, being relieved in dollar terms. so there are many transmission mechanisms of monetary policy beyond giving some shock therapy to the equity market. tom: that is a complexity that is out there. you mentioned spiral. that goes to the brilliance of one of your paragraphs come up you talk about not the golden spiral, but the golden ratio.

what we are trying to do within a chinese boom economy, david and i are going to gold logarithmic here, we are trying to get back to 1.61% which is the ratio of real gdp to inflation. what is your x-axis on getting back to that perfect golden ratio? david: i love that you asked that question. the golden ratio, 1.6 is a golden ratio in many aspect of mathematics. it is beautiful, if you will, and a beautiful economy tends to be when material gdp growth, i think of roughly 3% real gdp growth with roughly 2% inflation growth, so that is almost 1.5.

that is a good environment not just for equity investors, but also for main street, where it is kind of shared prosperity and sustained prosperity, so this may sound wonky, but i will take it back to the idea, if this is a cycle years old, we are worried about it possibly being overheated and being a short-lived cycle, it all depends on in 2023 and 2024, that denominator coming from 6% or 7% back down to 2% or 3%, and that would get us to a cycle that has cut greater prospects for longevity. beautiful, golden come along lived. a good ratio of real gdp to inflation. i hope the fed and other policymakers aim for that. jonathan: that is the challenge going forward. thank you very much, david

bianco of dws. tom: i want to go back to first principles here. powell won't get credit for this from all assembled, but the idea that we had a pandemic, that we had an historic for's -- an historic fiscal stimulus, it may have to do with trillions of dollars pushed into the economy. jonathan: would you like to have a conversation about the argument coming out of this white house? is that where you are taking this? tom: i am going to let other people have the argument. jonathan: well, i think you are going to do it right now. for good reason. if you missed it a bit earlier, good. tom keene, lisa abramowicz, jonathan ferro. futures up 0.3%. from new york, heard on radio, seen on tv, this is bloomberg. ♪

leigh-ann: with the first word news, i'm leigh-ann gerrans. u.s. and russian diplomat's have agreed to keep talking. that was about the only thing resolved in the first round of security discussions in geneva. there are big differences of a rush of troop buildup near ukraine. nene while, moscow is concerned about nato expanding further east. north korea's kim jong-un is ratcheting up tensions as he ignores calls for a return to stalled nuclear talks. for the second time in less than a week, north korea fired what appeared to be a ballistic missile off its eastern coast. south korea's news agency says the missile flew at almost 10 times the speed of sound. federal reserve chair jerome powell says the central bank will prevent higher inflation from being entrenched. still, he warns that the post-pandemic economy might look different than the previous expansion. powell's remarks are from an opening statement he will make at a senate confirmation hearing later today.

resident joe biden nominated him for a second four-year term. and chicago public schools will reopen with students tomorrow. the teachers union leadership agreed to accept a deal with city officials to restart classes in person. schools have been closed since last week, when teachers voted to shift to remote learning. they demanded that the city impose stricter protections against the coronavirus. another win for organized labor at starbucks. the union prevailed at a second new york store, according to the national labor relations board. starbucks may indeed appeal. 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. this is bloomberg.

>> even if there is nothing that

actually is bad, it just looks bad. ed raises this question that the federal reserve and other fiduciary organizations don't need. jonathan: big conversation about the federal reserve and the trading of members of the committee. from new york, with tom keene, lisa abramowicz, and jonathan ferro, your equity market is positive 15 or 16 points. nicely positive again on the nasdaq, up 83. this was not the story of midday yesterday. updated to -- up 82, advancing 0.5%. what we really need right now is a drink. lisa: really? jonathan: just a drink. that is what we really need right now. that's it. dk, over to you -- tk come over to you. tom: the proseco -- we need proseco, but the tang is out.

annmarie hordern is with us. how do the progressive aggress the chairman of the federal reserve? annmarie: the likes of elizabeth warren, already she called him a dangerous man. she will continue the path in light of the new trades or transactions she pulled out and decided to go another direction, which even the from her treasury secretary larry summers says is inconceivable. so you can imagine lot of ethics are going to be laid at the chairman today, as well as the topic of inflation. they want to know what the fed is going to do to temper inflation as he is going to be renominated because we all know he is going to get through the senate. a lot of this is going to be a little bit of a show, but there are a lot of questions right now around the capitol regarding ethics and inflation, the hot

button issue this year and last year as well. tom: "the washington post" does the inflation sum here. i get the senator from massachusetts's messaging for the chosen few on the progressive left. what is the messaging of chair powell today? who is he speaking for? annmarie: i think he's going to be speaking for the entire fed. we are still waiting for what the fed is exactly going to look like. we are still waiting on three nominations from the white house before the end of 2021. he's going to be speaking for the entire fed, and the fact that they have this track of a dual mandate. they want to make sure they have maximum employment. at the same time, at this moment, they have said time and time again that inflation was transitory. it does not look like it is going to be that transitory, so he is going to have to come up

with an answer and what they plan to do to really temper higher costs that everyday consumers are feeling and that politicians have been asking questions about time and time again. lisa: perhaps jay powell will give some indications on some of the key questions markets are wondering. from a political standpoint, how much do you expect to learn with respect to the fiscal support, the fiscal stimulus that was on the table as of the end of last year and seems to be increasingly off the table with the bbb? annmarie: with build back better , chairman powell is going to avoid this like the plague. he will say this is not for the fed to decide. this is an thing that legislators and the capitol needs to decide, something that politicians and lawmakers need to negotiate, and it doesn't have anything to do with what the fed should be doing. obviously the chairman did wade into a little bit of what was needed in terms of fiscal support during the depths of the pandemic in 2020, but you're not

going to hear him want to comment on many of these issues because that would just be political crossfire. lisa: a lot of these hearings are not to get information from the fed chair. it is to send a certain message. we are going to get acer possibly from senators on both sides of the aisle with respect to what they hope gets done or does not get done. how much is some sort of fiscal spending still being in the front and center for why we are seeing inflation where it is right now? annmarie: that is certainly what you are going to hear from the republicans, especially the likes of senator rick scott from florida. he talks about the fact that he wants the fed to really ratchet back on their bond buying and the fact that the democrats are spending too much. then you have the likes of senator joe manchin, who says that one of his key items to signing up for build back better last summer was that the fed starts ratcheting back their bond buying, and also to get

inflation under control. we are going to get inflation data very soon, and we are expecting to see potentially a 7% handle on u.s. inflation. we are seeing skyrocket inflation in other countries around the world. this is something that both parties are talking about. tom: where are -- jonathan: where are the other fed ex? -- other fed picks? annmarie: i don't have an answer for you. it does seem like they have narrowed it down to a very select few for the vice chair of supervision and the other two governorships, but we just don't know yet, and it is frustrating because we were promised that we would get these fed picks before the end of the year, and now we are in the second week january and we still don't have the. jonathan: amh down in d.c., thank you. and op-ed this morning, stop laming corbett agreed. you have an opportunity to bring

some credibility to the conversation. chairman powell is volume one of that effort. volume two is what you do with the other empty seats. the opportunity is right in front of them. they are dragging their feet, and i don't know why. tom: it takes a certain courage, and you will see that from vice-chairman brainerd as well. lisa was an early victory today. you and i just can't compete. we mentioned the letter g, the letter m, and lisa nailed it, today's word is gloom. jonathan: i didn't know that wordle only did one wear today. i did not know that. lisa: i am not going to get involved in this. i'm not going to spoil it for other people. people have their moments of joy, their pockets of joy in a very difficult year. let them have their wordle. [laughter] jonathan: this is a moment of joy in a gloomy world. tom: windows wordle -- when does

wordle go away? jonathan: i hope pretty soon. up 76 on tens after the monster move, about 25 basis points higher. yesterday the move was about 30 basis points or so. we had a move on twos as well. that curve is just a bit steeper. tom: i am watching it carefully into the morning. we don't need to micro analyze that, other than to say the market is gaming out where we are going to be not so much after, but even ring a powell testimony. jonathan: is it fair to think as shifted from 2% to 3%? tom: i am just not there. i don't want to get into the parlor export of gaming the fed. jonathan: isn't that the game we

play every single morning? are you trying to get away from it, tk? tom: tomorrow's word is dot plot. lisa: well said. jonathan: that is a few extra letters, tom. [laughter] anyway. from new york, this is bloomberg. ♪ ♪

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♪ jonathan: dan tannenbaum, good friend of this program, just called wordle the farm bill of 2022. does this make sense to you? what did you call it, a pocket of joy? lisa: a pocket of joy in a bleak moment. jonathan: equity futures up 0.3%. tom: jon, you are a pocket of joy. jonathan: everyone knows that, monday to friday. [laughter] nasdaq futures up 0.5 percent. big turnaround in yesterday's session, down by almost 3% at one point. a bit of a turnaround in the bond market. we breached 1.80% briefly, then came back down 1.76%. talk a lot this going about the

move on tens, the move on twos. up about 18 basis points on the year so far. we've got to talk about the relationship, or not much of one, between this and this. switch up the board and let's talk about the u.s. dollar. last year, a move of almost 6.5%, best yearly gain three dollar going back all the way to 2015. we are basically where we started the year, short of 96. that is where the conversation is for a lot of people in foreign exchange. where is the relationship between higher rates, this conversation of rate hikes, and why is this dollar not moving much at all? tom: it is interesting to see the parsing here as a real rate analysis. the dollar dynamic is really important. jonathan: lisa, was that a pocket of joy for you? lisa: i am absolutely overwhelmed. it is just overflowing. jonathan: that's the cross has

had price action. let's get you the movers with romaine. romaine: you always have that line in the sand people start to look for. what brings the dip buyers back in for the nasdaq? it appeared to be around the 200 a moving average. we had that around the session noon yesterday. we saw is sniffed into rebound off the lows of the day basically unchanged. tesla was really indymac of that. it was down almost 5% -- was really emblematic of that. it was down on was 5%. finished the day higher by 1%. amd higher by about 2% in the premarket, getting an upgrade at keybanc. some constructive commentary about some of the supply chain issues. flip up the board. you talk about some of the other movers out there. intel showing a lot of strength today, up 1.5%. a new cfo, the cfo from micron

is going to jump ship over to intel. some analysts are concerned about this. they say while the new cfo is great, much of the problems are not really about financials. rivian setting up for what could be a seventh straight day of losses, down about 3.6 percent in the premarket. a lot of that started on those concerns about amazon. we learned last night that their coo left the company last month. tom: thank you so much. romaine bostick on the equity markets. look for the closed this afternoon after the powell hearings. if it is like yesterday, it is going to be important to watch what happens in the afternoon in the equity markets. right now on the dollar, it is litmus paper for the global system. mark mccormick joins us. i am going to go all michael rosenberg on you as classic

textbook on currency. there's the rate analysis, but there's also the flow analysis. you say we need to pay particular attention to the current account balances in 2022. how will flows adapt and change the u.s. dollar? mark: that is a great perspective because if you look at the current-account perspective, the current account surplus in china is rising. current account deficits u.s. is also rising, so there is an element here that the impact of covid has kind of changed the entire macro dynamic, which is the service sector in europe is underperforming, and the manufacturing sector in asia is outperforming, so what we have seen his china has not been able to recycle its surplus. at the same time, we are seeing equity flows and other flows coming into china, which has created the upward drift in the renminbi.

if you look at euro-dollar china, this is all about current account dynamics. this is about how covid has disrupted the service in the manufacturing sectors. tom: we are 100% certain chairman powell is not going to do mccormick 101 in front of the politicians today. he is going to keep it very basic. what does he have to say about your world of trade flows to politicians worried about inflation? mark: i think outside of the trade flows, kind of go back to what i am saying. there is an element here that supply chains have been disrupted, countries are at different operating systems at how they deal with covid, and that is part of the cyclical driver of inflation. we won't talk about transitory. it is not the wordle, as you mentioned. but cyclical dynamics in

inflation are still tied to the supply chain. everyone starts to move back and a synchronized covid cycle, we are not seeing the same level of dispersion across country mobility that we saw during delta. we have also seen omicron start to peak, so there is an element we are moving back towards normal, and the reopening of the rebalancing of this channels. you are also seeing it through the high-frequency data on shipping and rates, and those are all big drivers of inflation, along with the base effects that come from the energy spike we saw last year. lisa: are you selling camp transitory even as we get more histrionics about a wage price spiral and runaway inflation? mark: i think an important way to talk about it is typical and structural. there are structural drivers of inflation that are changing, and they were changing through the 2018 trade war, and all of the things we've gone through through the last decade is related to deglobalization, so

international relations have been a big driver of globalization, which has been basically in tow for the last decade. lower productivity and less labor market participation is also a driver of structural inflation. but the supply chain is partly a cyclical driver, and we will see inflation come down in the second half of the year. lisa: i would love for you to respond to jim be uncle earlier -- to david bianco earlier. do you think that this is actually a way that the fed can transmit, or has the fx channel gotten too muddied? mark: they are all part of the same mechanism, so if you accept

tighter financial conditions in a stronger dollar, you are going to pull inflation lower. i just don't think that the rates channel works as well as it used to. if using about intermediary components that happen across all of these borders, even if you think about the complex city between the u.s., mexico and canada, the currency strength for trade flows doesn't really have the same impact. but there is an element that a stronger currency will tighten financial conditions. tighter financial conditions kick back into monetary policy, and i would argue, and i think policymakers will argue they are focusing on the financial conditions, so the broad-based tightening of financial conditions will help pull inflation lower over time with a bit of a lag. jonathan: final question about me. you are in canada right now. your experience at the moment when you speak to people based in the united states, based in asia, is there a home bias and

terms of what shapes their view of the world? is it dictated by where they live and the restrictions around covid? mark: yeah, i guess there is word may around jealousy in terms of weather, demographics, and how people are looking at other countries. we are tracking the mobility data, the lockdown data. we are back into the high-frequency data around that. i think there is an element that markets are kind of representing part of the openness because the openness in mobility is also being reflected in the growth numbers. what we have seen in canada is that mobility has declined. in germany, mobility has declined. those things are basically coordinating with the movement of the lockdown indicators, so there's an element that investors have to be focused on what is happening on the ground, particularly mobility, because if people are no longer moving around, it is a sign that growth is going to slow, at least in the second quarter after that.

we wrote on currencies in december, where we looked at growth expectations, augmented adjusted with ability indicators, and essentially what we got was a high, sharp ratio to tip to a baseline of just trading currencies on growth. so i do think there is an element that this is top of mind, maybe because they are seeing what people are doing around the world, but it also matters a lot for investment flows on the currency. jonathan: good to see you. mark mccormack of td securities. there are some massive differences right now between canada, parts of the united states, europe and hong kong, and china right now. lisa: i find that so fascinating right now. if you take a look at the mobility data, it directly correlates to growth and can be really illuminating for an fx trading strategy in the near term, even if it is only a quarter. to me it is fascinating and a time when so many people have moved beyond the pandemic, at least in their thinking. tom: -- jonathan: think about a

government trying to move past the pandemic, the u.k. boris johnson. tom: what i will say about mobility, and this goes off the great work of john silvia, for years associated with wells fargo. dr. silvia made clear -- jonathan: i miss john. he always one me to teach you about cricket. i never tried. i will leave that to someone else. coming up, the chief officer for international equities. futures up 15, advancing 0.3% on the s&p. we are up 76 on the nasdaq, up 0.5% from a beautiful new york. this is bloomberg. ♪ leigh-ann: with the first word

news, i'm leigh-ann gerrans. the u.s. senators set to vote this week to impose tough sections on the nord stream 2 pipeline. there is broad congressional opposition to the gas pipeline which stretches from russia to germany, but some democrats are concerned that sanctions would come to kate ongoing talks between the u.s. and russia. those discussions are aimed debt easing tensions over russia's troop old up around ukraine. in hong kong, authorities are doubling down on their controversial covid zero policy, re-imposing some of the strictest limits since the pandemic began. kindergartens and primary schools will close yet again. passengers from high risk countries are said to be band from transitioning through hong kong's airport. in the u.k., opposition bull additions are calling on boris johnson to resign. it has to do with an alleged party held in the down street office garden while pandemic restrictions were in place. it is the latest in a string of

allegations about rule breaking parties. they are being investigated by a senior civil servant. jp morgan ceo jamie dimon has issued a warning to the bank's unvaccinated workers in new york. he said that if they do not get vaccinated, they won't be allowed in the office, and if they are not at the office, they won't get paid. he said 90% and percent -- he said 97% of jp morgan employees in new york that had their shot. in college football, georgia beat its bitter rival for its first national title in 41 years. the bulldogs came from behind in the fourth quarter to defeat the top-ranked crimson tide. alabama had be georgia seven times in a row before that game. -- had beaten georgia seven times in a row before that game. global news 24 hours a day, on errand on quicktake. this is bloomberg. ♪

>> it will be quite some time before markets start suggesting

a slowdown in growth. if you see the hot economy start to take questions, that is when you run the risk of really seeing a substantial decline. but we are not there yet. jonathan: lori calvasina of rbc capital markets talking up the possibility of a story of two halves this year. the front half about the cyclicals, the back half may be about big tech. your equity market is positive, of 0.25% on the s&p. on nasdaq, up 0.4 percent. yields unchanged on tens at 1.758 6%. that is not the case on twos. two year yields are up by three basis points to 0.297%. that is a flatter curve. tom: it is a flatter curve, ever so slightly. we are getting their off of the angst of the last number of days. part of this is the parlor game of said guessing. we go with a chart, and then we go with wisdom.

kriti gupta has a wonderful chart for us. are we up to seven rate hikes yet? kriti: in some parts of the market, we are out to as much as eight. this is part of the issue, that so many different players are icing and different things. the. pot still shows three rate hikes in 2022 -- the dot plot still shows three rate hikes in 2022. jamie dimon is saying at least five this year. that brings me to this chart of what markets are actually thinking. this is the spread of euro-dollar's over the next few months. basically three month contracts. also used for hedging against those expectations, and for our radio audience, what you need to know is it just gets steeper and steeper in the last six months, now hitting 100 basis points over the next 12 months, essentially pricing and the fourth rate hike for 2022. this is significant because not only are you seeing in 10 year yield a 47 basis point rise over the last month or so, but you

are actually already seeing some of that priced into the market, and you are seeing that fourth rate hike be extra significant because some folks have said that perhaps the fourth rate hike getting priced into the underlying bond market could be the straw that breaks the camels back, at least in terms of the equity market. perhaps even an actual textual correction -- actual technical correction. tom: always looking good on radio, michael mckee steps in now. we can go to 14 topics here, but let's focus on the parlor game of the moment. have you ever seen at this silly? michael: yeah, this is what happens. the fed makes a prediction, and their production sits still for three months until they have another chance at making one, and the markets adjust every day. with apologies to your radio audience, the odds of a fed rate cut here, and what you see is it has moved up, but moved in. we are pricing in a sooner rate

move, and that is perhaps more important to the markets right now than where they end up. the reason is if they can go to the next chart, and this is the last when i will show on radio, the dot plot has not changed because of course, the fed has not moved. but look at the blue line. that is the options adjusted spread kriti was talking about. they don't think the fed gets to a terminal rate. they don't think the fed gets to 2.5%. so we are talking about earlier rate hikes, but not talking about significant rate hikes. tom: just drove off i-80 with all of the charts we are doing here. the summary of this for radio and for television is we are making it up as we go. how does chairman powell articulate that today without showing that what charts that the left -- showing dot plot charts that they left on the right don't care about? michael: the statement in his

prepared remarks, the idea that the economy is going to be different and the fed has to adapt to a changing economy, which is what they always do. no one really knows what is going to happen. these dot plots and projections for fed rate increases leave out the reduction in the balance sheet. what is that worth? how many basis points is that worth? does that take the place of one or more of these cuts? the fed has some strategy decisions to make. lisa: there's also an issue of what the fed put is worth at this point. we keep having this discussion. how much are we expecting the fed to give some indication of what market disruptions there are that they are not comfortable with? tom: you would have to ask jay powell directly to get an answer to that question because he will not bring up the markets on his own. the fed does not care if the market goes down. the fed does not care if there is a technical correction or not. what they care about is whether the system is functioning and

whether the market goes down too quickly and starts to seize up. that is what happened in march of 2020 and why they stepped in. but as many a fed chairman has said over the years, stocks go up and go down. they cannot be too influenced by that. jonathan: looking forward to you leading the conversation later with the cleveland fed president, loretta mester, at around 9:15 eastern time as we both catch up with the cleveland fed president. a couple of stories i want to pick up on. here's dow jones on citadel, set to receive its first outside investment in a deal valuing the electronic trading firm majority-owned by hedge fund billionaire ken griffin at around $10.2 billion. they go on to say sequoia capital and cryptocurrency investor paradigm have agreed to invest $1.15 billion in the chicago-based firm. tom: i can't emphasize enough the importance of these two names.

paradigm may be less known, but sequoia capital, when i saw that come up, this is i am sure what citadel, not only be hedge fund, but the order flow firm, this is exactly what they wanted. this is good housekeeping seal of approval from venture capital. jonathan: citadel securities to receive first outside investment. the second story i wanted to talk about, goldman's call for china gdp has just come in a revised forecast for 4.3%. the reviser forecasts 4.3 percent. initially my reaction was to compare and contrast with america. the fed has got real gdp were -- real gdp growth in america at 4%. that is china gdp coming down to where u.s. gdp is set to be in tom: tom: 2022. -- in 2022. tom: the benchmark has been for labor stability in china.

this alludes to what we have heard from the china beige book as well, that anything under 6%, you begin to get into domestic tensions, and frontally we don't focus on them all that much. jonathan: 4.3% the gdp forecast for china in 2022. lisa: how much does it dovetail into the global projection? danny blanchflower saying this is the biggest -- princes go blanche saying this is the biggest downside to their call. how much growth, especially with supply chain disruptions? to me, the big wild card is the zero covid policy. tom: what does it mean for -- jonathan: what does it mean for supply chains? is it likely the fed has to do more or do less? that is where it gets complex. lisa: especially as you see companies increasingly raise their prices because of the kinks in the supply chain that seemed to be persisting for longer. jonathan: and in turn, wages go

up. up on the s&p, up 0.3%. from new york city, great week coming up. a reconfirmation hearing a little bit later. cpi tomorrow, retail sales friday. on radio, on tv, this is "bloomberg surveillance."

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♪ >> investors are hard-pressed to find a better place to invest in the future than the united states. >> volatility in terms of the rate increases, the volatility we are seeing in terms of anticipation of earnings. >> do not chase last year's performance. >> the bond market seems to be pricing in a very hawkish fed. >> it's painful. it's got a little more ways to go. >> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. tom: good morning, everyone. an eventful day here. chairman powell testimony later