>> it is important that the fed has pivoted and changed direction and the market is handling that quite well. >> this repricing still has a lot of room to go. >> we do think omicron is going to impact earnings. >> i think the market has legs to go higher. >> it is a rapidly aging cycle. we will see if it ages well or it ages poorly. >> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. tom: good morning, everyone. a 40 year high for inflation. will it be 7% or higher? it is the item of the hour, in

30 minutes, a report on the nation's price change. as lisa mentioned earlier, part of that is rent. part of that is real estate. jonathan: will it reinforce the fed's new pivot? it is likely to. people expect and them to make a move in march. how bad does the data need to be on the output side of things for them to back away? for corporations, you have talked about it time and time again, can they keep adapting? can the insulators margins, expand them in the ways they did last year? tom: we will look at the financial parts of this, and the market reaction at 8:31, but it comes down to basics that we are guilty of ignoring everyday. chicken in the last year from $1.13 out to $1.80 a pound. that is the granularity of this report this morning. jonathan: people are feeling it, and that is the problem. when you look at the labor market, things are tightening up. wages are decent. wage growth in america in real

terms is still negative with headline inflation at 7%. tom: can wages keep up, without all of your reading? you were very strong this morning on twitter with all of what is going on. can wages keep up with inflation? lisa: right now people are saying that is what is leading wages higher, that people are leaving their jobs, and when they start to get another one, they say my grocery bill has gone up this much, so my salary should, too, and that is leading some of the wage gains. how much does that persist? some people say you would expect to see higher wages, but are we going to see labor's share of profits actually increase in this? that still remains to be seen. tom: that's the social aspect. let's go back to the financial aspect. it is the market reaction. what would you suggest? jonathan: let's talk about with a long and has been up to. back down to 1.74%. thing sebastien page of t. rowe price put it correctly earlier on. where does the hawk a surprise

come from with a market now geared up for four hikes this year and some balance sheet reduction in the mix, too? tom: just what if's for the reports here in 25 minutes. a gallon of gas unleaded is zero dollars 39 cents under the peak of autumn. jonathan: what can they do about it? i caught up with the administration yesterday evening. they have not seen the number just yet. one thing they were keen to point out, look at the positive trend in the labor market. we think that is going to be sticky through the year ahead. what we don't think will be sticky is the goods price inflation of the last 12 months. they hope that fades for the year ahead. i think that is economic nirvana not just for the administration, but for the fed chair as well. that is threading the needle. can we keep this pressure going nicely? can we keep wages bubbling? if that is the case, that's a

pretty healthy situation. that is not what we have at the moment. tom: we are going to address this unfolding into the ugly market, including mr. diamond's optimism -- mr. di -- the equity market, including mr. dimon's optimism yesterday. jonathan: wti pushing $82 at $81.54, up 0.4%. yields unchanged at 1.739 3%. basically unchanged on euro-dollar at 1.3065%. the nasdaq 100 up 40, of 0.25%. tom: great lineup of guests to brief you before this report and afterwards as well. one of the great features of alisa levine is the broad education that says how do you address equities at any given point. the head of equityzen capital market advisory at bny mellon joins us this morning. what matters right now? alicia: that number at 8:30

matters, but to your comments earlier, a lot of the expectation for a hot print is already priced into the market. the market did a lot of work in the first six trading days of 2022 in terms of pricing a more hawkish fed. so in some sense, the risk is to the other side over the next few weeks as data come in and we get earnings that help stabilize markets. so that is what matters. the most hawkish we could get from this point, and terms of wall street expectations, is a rolloff of qt in march. that is about the worst you could possibly do in terms of the markets, and we don't think we are there. don't think the data is going to support that. we think the message that has been sent by the fed and pre-much consensus has already gotten the market to do the work. so wishing the risk is in the other side from here. that does not mean it is going to be a terrifically easy year. it is going to be a grind of a year, but we think you wind up

positive on the s&p by the end of the year. jonathan: we talked about this a lot over the last 12 months. the last 12 months was about margins and earnings in covert america. tom talked about it a million times. going into 2022, is it all about the fed? is that the single issue for this equity market? alicia: the seam of the equity market this year is going to be earnings because our multiples are going to get slightly more compressed from here, so earnings are going to have to drive the market here. we do think some sectors of the s&p can earn right through this. for instance, we think the focus in 2022 is moving away from consumer led growth toward capex in 2022 and 2023 as those supply chains get restored and companies move towards instead of just this time, it is just in

case. so we see loans starting to grow at the banks at the end of december, so i think industrials can do well, financials should do well in a rate rising environment, and ultimately we think is profitable tech companies still do well starting in the middle of the year as growth slows naturally. we are not talking about a slow down. we are talking about a slower growth rate. jonathan: you mention how much work we have done at the early part of 2022. what other financials do you like? what kind of financials do you want to own? lisa: you want to -- alicia: you want to own the banks that lend because is increasing. -- because capex is increasing. we see credit card debt increasing. the banks that lend should do relatively better, and if you look at history, the first couple of rate hikes tend to correlate with rate outperformance. you have some runway here,

definitely for the first six months. it has been very hard to project further than that because the recovery has not been linear because the virus has not been linear. this thing is not linear. but i feel comfortable saying for the first half of the year, we do think financials can outperform. even from here, do you wait a couple of days for this to come off a little bit? of course you do. you never just want to buy the spike. but fundamentally, we think the earnings power is coming through. who is going to earn? who is going to beat earnings? we think financials can do it. lisa: a lot of people have been looking more broadly at the cyclicals and all of these other value stocks that have not gotten is loved. where do smaller companies, where does the russell 2000 fit into this when they may have a harder time adapting? alicia: over 50% of firms said

they were going to increase wages and increase prices. so small businesses can react more quickly to the real economy and the conditions therein, but i think there is a pain trade there, and i think some of the smaller companies will have a harder time dealing with input costs that are higher. i thing the real risk is really the labor market, the supply of labor read it is a tight labor market in the conventional sense of how we look at it, three point 9% unemployment. that is the number we all remember. that is a great number, but ultimately we are still missing 4 million people that were in the market two years ago, 3 million of which are either women or over 55. that is a health issue. so if this thing is not linear, you can't project it. tom: very quickly here, and on radio it should be noted that she has a 70,000 piece lego

millennium falcon behind her in her living room. you know that the galactic economy never was the same after hyperdrive came in. hyperdrive came in like on the millennium falcon and change the economics of star wars. are we misjudging the technological innovation of the next couple of years? alicia: yes. that is why we still believe in tech. i don't think tech is going to have a great quarter because this is a quarter that the bond market and the equity market has to do the rotation into the tightening and that is coming forward, but ultimately, digitization and capex means investment in tech. so alternately, we are overweight for that reason. is it going to be a tough quarter? yes, but that is why you own energy and financials and industrials that are all going to benefit from that same capex

cycle. jonathan: control room debate now. is it the millennium falcon or an imperial cruiser? what is it? alicia: that behind my shoulder is an imperial star destroyer. jonathan: there we go. all about the facts here. alicia, thank you. alicia lavina bny mellon. javier blas had a tweet to this morning on companies adapting. this from the dominoes ceo. the first changes to its national office will be to make the carry out offer into an online only deal and renews the number of chicken wings per order to eight from 10. this is the shrinkflation dynamic. tom: it is there. it always is. jonathan: keep the numbers the same, give them us. the s&p up 0.1%. 8:30 eastern, inflation in america. from new york, this is bloomberg. ♪ leigh-ann: with the first word

news, i'm leigh-ann gerrans. the u.s. consumer price index coming out in a few minutes is expected to show that inflation climbed to 7% in december. that would be the most since 1982. that will keep market attention on a fed rate lift off as soon as the march policy makers meeting. the cpi data is released at 8:30 a.m. new york time. here in the u.k., prime minister boris johnson has apologized for attending a downing street garden party during lockdowns in may 2020, but in parliament today, he insisted he thought it was a work event. pm johnson: with hindsight, i should have sent everyone back inside. i should have found some other way to thank them. and i should have recognized that even if it could be said technically to fall within the guidance, there would be millions and millions of people who simply would not see it that way. leigh-ann: the leader of the

opposition party has called for the resignation of johnson. the white house is moving to prevent future shortages of coronavirus tests. the administration wants to ensure that they can do to be produced in large numbers even after the omicron variant receipts -- variant recedes. frustration poses a political risk for president biden. morgan stanley will raise annual bonuses for its best-performing staff by more than 20%. reports say, according to reuters, bankers and the equity underwriting and advisory m&a business are expected to get the biggest raises. morgan stanley is not commenting. 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. ♪

♪ jonathan: from new york city,

for our audience worldwide, alongside tom keene and lisa abramowicz, i'm jonathan ferro. counting you down to inflation data and america, about 12 minutes away. and your equity market, up seven on the s&p. on the nasdaq 100, we advanced 42, up 0.3 percent. yields unchanged at 1.733 2%. as alicia levine said minutes ago, we've done a lot of work already this year. the 10-year gilts up by around 22 basis points at the moment. yields up, we have priced in more hikes, and to her point, it is going to take a lot to surprise this market at 8:30 eastern. the estimate at the moment is 7%. tom: she had an estimate like we heard from julian emanuel at evercore isi, and what we heard from james dimon over the last few days at j.p. morgan. these people are betting on growth. jonathan: looking for a better economy and the year ahead. that seems to be a bottom line. tom: we do have a winner on

"surveillance," ann marie nails it time and time again. today's wordle is spurs, because they play chelsea. jonathan: is that your word of the day and not the wordle? tom: it is the "surveillance" world -- the "surveillance" worl e. it is different. because of this inflation report, how does a bond guy and a short-term paper guy like you, ira, how do you interpret or use the data that we have will -- that we will see in 10 minutes? ira: it will be the internal data, so if we get anywhere between 6.5% and 7.5%, the market is probably not going to react that crazy. but some of the internal data is really important, particularly at i am going to be focusing on, the services component. bicycle he have four big

components of cpi come with services been the one that tends to be the most sticky. if we are going to see for percent, 4.5% inflation, that is the sector that has to see growth in order for that to occur. last month it fell a little bit in november compared to october, but in december, if it comes in again at 0.3%, that is a good sign that we will have inflation moderating over the course of the year. lisa: how messy is this data, given the fact that we are still dealing with omicron, still? dealing with certain restrictions? this is not necessarily a clean read on a recovery of the services sector. ira: unfortunately, that is the world we live in these days. we don't know would such a with the trends are going to be because we don't know how omicron is necessarily going to affect lockdowns and the like. but we do know that oil prices have not gone up a lot over the last couple of months. have kind of hovered -- they have kind of hovered $70 to $80.

we have a pretty good idea of where that will be. it is services prices that are going to be driving a lot of these reports, and services are affected significantly by lockdowns, and also labor participation and what wages are doing. we know that aggregate labor has actually stabilized quite significantly, which is a little bit surprising given how tight the labor market is. since that is the case, we might see services prices kind of stabilize near these levels at 0.3% a month, which means that you would have inflation by the end of the year under 4%, all else being equal. lisa: when you start to look at specific components, there's a question about what the fed can do to affect any of them. how much can they affect supply chain disruptions? how much can they affect services inflation? is there a component of the inflation read that will catch the fed's attention more than any other? ira: i think it is going to be

core goods and core services prices. the fed really can affect the manned, particularly in the goods sector. so they raise interest rates. people will theoretically borrow less, or it becomes more expensive for them to buy a good evening a higher price, so that will crimp demand. the fed really has a significant impact on the demand side of the economy. not so much on the supply side, which is one of the reasons why it is really a tough situation for them because, do they wind up crimping demand because of these supply-side issues? will the supply-side issues work themselves out if there is less demand? it is really a conundrum for the fed at this point because we don't see a demand driven inflation in many sectors. tom: steve major has been dead on at hsbc about lower for longer on rates. he reaffirmed that today under a 1% call out. do you have a framework of

getting to a positive real yield , within the mix that you do at bloomberg intelligence? can you say a positive real yield when? ira: it depends where you are looking along the curve, but if we are looking at the short end out to do years, we think that by 2024, we could have a zero real yield, so not very positive, but we think that the real yield on the front end of the curve could be positive by the end of the cycle. the longer end is a little bit dicier because you have significant increases in inflation expectations. when you look at the market, you look at how tips are trading, there's a lot of people still piling money into inflation related products like etf's and mutual funds, and that is keeping real yields significantly lower than they probably should be. our model shows fair value for 10 year tips at -50 basis points. we are now at -85. that is a 35 basis point

richness in that part of the curve. i think that is in large part because of what retailers doing, and in part as well as we see the fed taper, you have seen significant increase in real yields over the course of the year, but it is still not anywhere near where they probably should be, given the economic environment. jonathan: thank you. good to see you, sir. ira jersey leading the coverage on the data -- ira jersey. leading the coverage on the data, as always, mike mckee. michael: we were at 6.8% last month, and it is not a significant change to get to 7%, but it will be a political issue for the fed chair, who has to live up to his promise that he made yesterday that they can bring this in for a soft landing, and it is obviously a political problem for joe biden. interestingly enough, the new york fed does a survey of consumers every month, and in december, consumers felt that prices were going down for things like gasoline and food.

let's see if that matches up with reality. tom: core or headline, which is the greatest value to our listeners and viewers? we are living headline. michael: i would say headline because that is the headline that is going to be in the paper that is going to get into people's minds, but ira jersey is right, we will look at the subcomponents and see what is gaining, what is losing, if anything, and get some idea of where we are going from here. tom: what is amazing is he will be just as strong on retail friday. . jonathan: we will be teasing that after cpi wednesday. the sticker shock of that handle, that is the front page. the difference is only 20 basis points from the previous month. i say only because the difference is much bigger than that. tom: it is so different than the last time we were at 7%. the dismal 70's, the defeatist attitude of that high inflation was radically different than what we face now. jonathan: breaking it down for

us, michael mckee, when we get to that. were spun to it, michael gapen, looking for a hike in march. you'll's unchanged on tens at 1.73 22 percent. cpi in america, the data up next. from new york, this is bloomberg. ♪

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jon: your economic data seconds away. from new york city on tv and radio at tom keene at lisa abramowicz, i am jonathan ferro. equity futures up to tense a 1%. up a third on the nasdaq. yields on a tenure changed at 173. we go nowhere at 113. here is mike mckee. >> economists who predicted a seven year cpi is exactly what we got. as cpi rises have a percent on the month. the core rate goes up .6 percent, pushing that a 5.5%, a take higher than anticipated. i want to stress a number we have not stressed in previous years or even months, but it's getting to be more important, that is average hourly earnings. the bureau of labor statistics

takes the average hourly earnings numbers we get from the employment report and subtracts inflation from that real average hourly earnings down to 44% -- down 2.4%. you are too .4% behind inflation at this point. that will be the political issue for joe biden and for jay powell. jon: i will just whip through the markets quickly. futures up .2%, and the nasdaq up .3%. no big moves here. the front and up -- front end up by a couple basis points. when you go through this data, this market has been primed for this for quite a while. this feels like a bigger political story and it is a market one. tom: strongly agree with that. what you look at is the so-called into grand, the space, the area under the zero line. and michael mckee, all of this

comes down to a political reality of 2021. there is a lot of negative wage into grand there. michael: yeah. that will be an issue going forward. if the fed is right and inflation backs off, the question is, when will people feel that and notice eight? they will be looking at things as this comes up every month like food and energy. the slightly good news is that food prices on the month rose .5%, lower than november and october and september. so a little back off. it is still up 6.3% on the year, so people will notice that, 6.5% in terms of food at home. gasoline prices are down by half a percent in december, but as you have been reporting, oil prices rising again and we will see what happens with that in the month of january. gasoline prices of the year up 49.9%. that will get people's

attention. lisa: how much are we seeing that service sector inflation rebound that a lot of people have been expecting as the goods area starts to decelerate a little bit? michael: that's what they find out a little bit. we found service center .3% and was forecast in the month of october -- and was .4% in october and .4% in november. it is down a little bit, but if you look at the headline number, up 7% and services up 3.7 percent, a big contribution from goods. a lot of that a supply chains. service industry, less of a supply-chain problem because people are not using. tom: one final question here, the oer residences nonseasonally adjusted up 4%. no one listening or watching believes that statistic. how valid is oer to what we are living with an rent and mortgages? michael: it's about as good as they can figure out how to do.

that is the way the government calculates what it costs to buy a home and one of the big problems with buying a home is you only do it once every decade or so. so it is not an ongoing thing that changes month-to-month for most people and that makes it hard to come up with a number for it. we have seen rents owing up. they have been repricing. everybody got a deal during the pandemic in 2020 and now those leases are up and people are having to pay up and they use that imputed rent to get the household number out of it. so we know home prices are going on, but slowly. tom: thank you so much. much more from mr. mckie in the morning. we have to do the data one more time. brent crude breaking to a higher level up to 84 point 40. i see the vix coming in. after what we saw monday, i vix 17.94 is a big deal. jon: not much price action. 30's up a single basis point to

almost 2.1%. tuesday south of 90 come up a sigel basis point. this is the political story, it has been some 40 years. have to go back to 1982 the last time we saw i seven handle. for many people it is let's go let's go. on the fomc, michael gave an joins us now -- michael --michael gapen joins us now. what would be stopping between now and then? michael: not much. he would need a major shift on say the omicron effect on the economy, a geopolitical event that would somehow disrupt the economy. in terms of where the fed is on their dual mandate, inflation in the labor market, they are basically there. so coming out of the last employment report with the unemployment rate at 3.9%, another month of solid employment gains, .6% rise in average earnings. that pretty much meets their bar. in january at the meeting at the end of this month, they could

declare we are at full employment. yesterday powell said we are at or very close to full employment. they have already told us they are on the inflation side, so i do not think anything stops them from going in march except an outlier event. tom: you are not are the only ones that will understand 1982, i've the tiger reigned supreme. when inflation's rise up back on the street, is this the same inflation as 1982? michael: no. that was rocky three, right? [laughter] the 70's and 80's inflation was a multi-decade period of demand exceeding supply, creating wage price spiral, higher inflation expectations. it was very much a demand driven story but there was supply stock -- supply shock components with it at the time. this is a different outcome. it is not necessarily from persistently easy all of the over previous decades.

obviously we have fiscal policy and the response to the pandemic. we think it is primarily a pandemic-driven story. that is likely to ease over time. as you mentioned in the last segment, what can the fed do about that? i think a lot of this risk management positioning is about second ground effects, preventing the impulse today from showing up in a lot higher longer run inflation expectation. i think it is a different inflation, so how the fed responds to it should be interesting. tom: with a president and his will to survive. what does i didn't do with 7% inflation? michael: in part talk about that you get it, you see it, you understand the problem, it crimps incomes, households are sensitive to changes in energy prices and food prices. and you also want to take steps perhaps to help solve it, make sure your federal reserve chairman that you are appointing

understands the issue and importance of getting inflation lower. they unlock some strategic reserve in terms of oil supply. there is discussions around do you reverse tariffs on imports from china. so what can you do to help bring inflation down and stabilize the situation? certainly he has to say we get it and understand it and are taking corrective measures. lisa: how do you get the wrong kind of inflation down as you get the inflation they want to see? administration perhaps looking much more at the wage increases and possibly a good thing for the worker. paint a picture of negative 2.4% real year-over-year hourly wages. what does that mean in terms of the wage increases we can expect going forward and trajectory of economic momentum. -- momentum? michael: any conditions in the labor market are tight. we have roughly 4 million people sitting on the sidelines. demand for labor is strong.

i suspect labor market conditions will remain robust and average hourly earnings will continue to take higher. and you would hope some of the inflation comes down on the other side. in the moment, what it means his it crimson real purchasing power. disposable income was all of the story last year about government reporting income. if you adjust for inflation, multiple income for the last few months has been ticking lower. it might feed into less demand. this is where the fed messaging has shifted. a used to be we need accommodative policy to keep labor market momentum going. now what we need is a belies inflation to keep labor markets going and income and purchasing power elevated. it has shift the narrative from the fed. jon: part of that is not just rate hikes, it is balance sheet reduction, and informing the moment is the fed she. where is this going? we are trying to work out the

reduction. have you got any idea what that looks like through the back half of this year as they start the summer and what it looks like into next year? michael:michael: most of us think the balance sheet runoff will start in the second half of the year. we are in july and policy later this year. when you look at the maturity schedule of the fed's balance sheet, roughly over the year after that point, you are looking -- let's call it $1 trillion in treasuries written often prepay estimates and portfolios will give you around another $300 million. so i think you could have half of that, 750 billion dollars, maybe up to $1 trillion, in terms of how much the fed wants to take out over the first 12 months. let's call it $60 billion to $80 billion a month. they mean the -- they may need to go to started a cap that's lower and go higher but i thing they want the balance sheet sooner rather than later. with the 1.5 trillion dollars sitting in the repo facility, i

think they can feel they can do to raining's of reserves without having a negative effect on front-end financing conditions. i think they may try to get a fairly fast pace of runoff in the beginning. last point, there is about 325 -- 320 $5 billion on the fed's balance sheet this time. we almost had zero in the last expansion. you may see different runoff rates for the t-bills and remainder of the coupon holdings they have. you could get a lot of runoffs quickly just by letting them go. jon: that's an interesting point. michael gapen, thank you. michael gapen of barclays. the sticker shock will be a political issue. we have to go back to 1982 to see an inflation print in america this high. from new york, this is bloomberg. ♪ >> with the first word news, i

am leigh-ann gerrans. the inflation rate in the u.s. has hit the highest level in four decades. the consumer price index for december was 7% higher than the previous year. that was the most since 1982 and in line with expectations. energy prices fell months there were rapid increases in food, cars, and close. the ceo of the second largest gold miner is skeptical of government attempts to pave inflation. we spoke to them in saudi arabia. >> when inflation arrives, it is difficult to stop. it needs to be dealt with any robust fashion and i do not think this -- there is political will around the world to do that. >> he also says cryptocurrency cannot beat gold when it comes to a hedge against inflation. for the first time since 2015, bmw has beaten its rival mercedes with a luxury car series craft.

sales a bmw rose 2.2 million last year. mercedes output fell 5% to do .1 million after the lack of semiconductors and the second half. a teenage security researcher claims he hacked into more than 25 teslas in 13 countries in a series of tweets. he said a software door allowed him to undock -- unlock doors and windows, start the car without keys, and disable their security system. columbo says tesla is now investigating. global news, 24 hours a day, on air and on "bloomberg quicktake," powered by more than 2700 journalists and analysts in over 120 countries. i'm leigh-ann gerrans. this is bloomberg. ♪ is is bloomberg. ♪

>> inflation, which i don't think is transitory, i think it

is what's to be expected given the amount of economic stimulus that went into governments around the world. one way you know this inflation is going to stick is the wage inflation. you can't take it back after you increase the wage. at the end of the day, i think that tells us a lot. tom: melody hopson of chicago and aerial investments, the co-chief office there and many other where the items from princeton university and around this nation. a philanthropist and i should note with bloomberg philanthropies as well. but there is a different story, a story david rubenstein dives into. this is the youngest kid of a single mom among who the struggle of painting a wall set i want my daughter to go to better schools. melody, i think one than anyone i know in the game, has excelled with people who have forgotten about her past. you explore that with melanie? >> i did.

and of course she has not forgotten her past. she is the youngest of six children and she was frequently finding her mother was being evicted and they had to worry about where the food was coming from. she got a princeton degree and became a co-ceo as you pointed out of a minority owned investment firm in chicago. married george lucas and she is now actively involved in philanthropy but also the cochairmen or chairman i should same starbucks and is the co-ceo of her firm. tom: i take immense issue that say well it is george lucas or whatever. it is about a character set from her childhood. what did you discuss about her from the best practices she learned in chicago. david: among other things, how to work hard, study, and be loyal. she joined ariel out of college and has been there ever since. she is the only person in her class a princeton who has the same telephone number they had on graduation. [laughter] she has not changed jobs. the only person in her class she

says has not changed jobs. lisa: how is that view from her perspective growing up from a much less beneficial or much less wealthy past into where she is now. color her view on how companies should operate themselves on how they should pay their employees. tom: she believes companies need to do a better job of getting minorities on their board and minorities in their executive suites. that is one of her areas of focus. she is also on the jp morgan board and they have been making a major effort to make efforts made in minority owned firms. she has not forgotten of her past. although she can go out and see anybody in the world today because she is so well-known and did this interview with me when she just flew in from a conference in dubai and got off the plane and got cleaned up and to the interview. then she was off to i think the west coast. she is an incredible person, but she is not forgotten her past. many people who come from poor circumstances sometimes forget their past, but she does not. she is close to her family and

is very close to giving back to a lot of parts of chicago where she is based in terms of making certain people there have better chances than maybe she had as a young person. lisa: it's a fascinating time to speak with her, especially as we seem to be added pivot point in the economy with a changed landscape for inflation. we got that inflation rate and real wages still negative, deeply so. some of the most negative real wages year over back decades. what is her view on how to invest in such an uncertain economy? david: her firm has been a value investment firm which is to say they look at companies that are not the high-tech "high flyers" but ones that clearly will do well when the economy is in reasonable shape or not growing so well. that is what they have been doing for 20 plus years she has been there. her view is she cannot just chase the "high flyers" but she thinks their value is out there. she is a careful investor. she is not somebody that travels

around the world and tells people i'm married to george lucas, i'm good friends with bradley. she does hard work and is knowledgeable about what she talks about. tom: she faces the challenge of active management. it was clear in the 1980's when john rogers launched a strange experiment. they have to deal in the new financial world. mr. rubenstein, we have to have you comment on new and fresh investment citadel securities. not the hedge fund but the order flow robinhood part of it. please discuss the paradigm and how they have chosen to -- the sequoia paradigm and how they have chosen to invest. david: sequoia has done extremely well in recent years. they have made a $1.5 billion investment into the citadel securities company that was built by a talented person, ken griffin. ken griffin has run citadel's hedge fund for a long time, a 43 billion dollar hedge fund. a separate business, which is

extreme leap profitable, is it is they'll -- is citadel securities which is trading all over the world. david: it is amazing how you finesse this. i will stop the show. david rubenstein is dropping the lead line here. what is it like that duke university could generate a guy like fred who did coinbase, did this, and now takes part in citadel? david: i'm sure the development people at duke will be in touch with him shortly. [laughter] but obviously we are proud to have people like that come from duke university. ken griffin is a graduate of harvard and came from circumstances and has been trading ever since. he has become one of the most successful people in the financial service world. tom: a joy to have you join us. david rubenstein of course of carlisle. melanie hopson who has been a board member for bloomberg philanthropies as well. lisa, the markets move and i will say it is a constructive

treatment on what we see off of this inflation report. lisa: people already had a sense of what to expect and it seems like the market is taking in stride some of these figures. looking under the hood, i'm struck by this inflation report. it is not a food and energy driven one. of the core cpi rising more than expected with shelter costs rising 0.4% from the prior month after several reads 04 -- 0.5%. red costs are going up dramatically. autos, a huge driver of the increase in inflation. they are still going up as some of the display -- some of the supply chain disruption remains to be high. tom: we see it in the data with the yield coming 1.72%. that is a fractional move. we will take it. nasdaq up .8%. nasdaq, they are a good number here, almost back to the 16,000 level. lisa: i gotta say, at what point do we move beyond it is baked in? there is so much disagreement

among many people. is it all baked in? tom: no, it is not. lisa: is there something potentially cause for volatility? tom: we like to do storytelling and we are on a journey here and we have to have -- it is all baked in. it is not all baked in and after you have been wrong seven times in a row like i have in the markets, you learn it is not all baked in. the smartest thing i heard today , i can't remember, my brain is frozen. i remember rough but i do not remember who said we need to to four months of inflation data to get a real trend here. lisa: the problem is a lot of people saying the fed is behind the curve. when you see rents increase as much as they have, that is a lagging indicator. it is lagging behind gold prices as -- prices and will continue to increase. how much do wages catch up with the pace of inflation and people say i am basically getting a pay cut if you don't pay me more? tom: i would link lagging indicator directly into the morgan stanley compensation left that leigh-ann gerrans was

talking about earlier. it's an eventful day. we continue to look at the pandemic and pharmaceuticals, a theme for bloomberg this week. our next guest joins from cicada. this is bloomberg. ♪ s is bloomberg. ♪

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>> it is a number we have not seen for 40 years, a number the

market has been primed for for several months. your actively -- equity market up. the countdown to the open starts now. >> everything you need to get set for the start of u.s. trading. this is bloomberg the open with jonathan ferro. [bellringing] jon: from new york, we begin with the big issue, inflation in america. >> inflation -- >> inflation -- >> as we think about inflation -- >> the fed is in a tough spot. >> they have a significant inflation problem on their hands. >> the cpi -- >> cpi numbers -- >> first quarter data numbers will not look fantastic. >> we are looking at a seven handle. >> they will need to thread the needle here. >> they want to appease financial markets. >> convince market players they will control inflation. >> on the other hand, you got the public upset about inflation. >> problem number one for the