>> this rally, this year will be unlike last year. it will be volatile. >> are multiples will get slightly more compressed so earnings will have to drive the market. >> we think omicron will impact earnings. >> the market has legs to go higher. >> it is a rapidly aging cycle. >> this is "bloomberg surveillance" with tom keene, jonathan ferro and lisa abramowicz. jonathan: from new york city, good morning, good morning. this is "bloomberg surveillance ." alongside tom keene and lisa abramowicz, i am jonathan ferro. tom keene, ppi a little bit later this morning. all the sudden, tom: -- all of the sudden, business inflation.

a 9.8 statistic is still jaw-dropping. jonathan: will governor brainard become vice chair brainard in a few weeks' time? we have not tom: -- tom: we have not talked about this. i think brainard is less well known. it will be interesting to see how she responds to some of the tensions. jonathan: i think we are ready to go in a couple of months. lisa: and they are ready to go after that. you're seeing four rate hikes priced in for 2022. the key issue is what happens after that. people are expecting that you are going to see fastest pace of inflation for this producer prices in decades.

however, people are expecting it to peak, and what is the trajectory of it falling back down? the fed has acknowledged they have no clue, and does anybody else. jonathan: how much will gross decelerate? the near term weakness we are seeing in places like the airline business, delta out this morning saying january and february is going to be tough to get the rest of the year is going to be better. that is where the hope lies, this is some near term weakness. the market for sure has been looking through it. tom: i still think the partition is there between people cautious, looking for a slow down, and those that are really gross optimists. i center back to what we heard from julian emanuel yesterday off of ed hyman and evercore isi. jonathan: did we agree whether we would go for a cruise or not? tom: look, it is in planning right now. we did not want to let you know about this. i did not want to let you know on air, but a "surveillance"

cruise right now, the biggest problem we are having is out of st. petersburg, do we really want to go the distance, as they said in that baseball movie? it means we are going down to sarasota, turning around and coming back. [laughter] seriously, our guest coming up in moments has already agreed to come on. this is going to be really important. lunch with jon because he is only getting up at 11:00, and yes, there will be a memorabilia auction. bowties will be on hand. jonathan: and mugs that say good morning good morning. and then we both retire into the sunset, holding hands. [laughter] lisa: someone on twitter actually called it voyage of the dammed. i will say that is the impression of what we will get. jonathan: futures this morning, look at those markets. unchanged on the s&p.

bond market unchanged, 1.746 4%. we've already had a conversation about the weakness despite the moves we have seen in the treasury market. euro-dollar 1.1461. lisa: how much has already been priced in? that is where the focus has been in markets. i wonder whether equities have truly priced in four rate hikes for 2022. at eight a clock a.m., u.s. december ppi data. we also get initial jobless claims. the question, when does it plateau, when do we start seeing it ease, this has been the theme in every analyst note i have been reading, which is that we are nearing the peak. people point to ism manufacturing prices paid statistic, showing the biggest deceleration and prices paid. is this a sign or is this just confusion amid a lot of noisy data? lael brainard is appearing before the senate for that confirmation.

will she get confirmed is a lot less clear than jay powell. how does she redirect the call for three or four hikes -- she reiterate the call for three or four hikes priced into the market? the march rate hike is basically a given given all the rhetoric we have gotten from fed officials. at 1:00 p.m., the treasury is selling 30 year bonds. this is really important. to me, i really orderly auction year is the most ambiguous, what the longer-term trajectory of inflation is? and taking a look at the gap between 10 year and 30 year treasury yields, it has contracted going back to 2019. what is this telling us? the idea of slowing growth and not necessarily a secular change. tom: is that all foreigners buying that? lisa: that is the issue. it is how much is it worthwhile for foreigners to come in if you have a weaker dollar kind of call.

pgim fixed income coming in and saying they do see value right now, given the fact that the cs going back to a low-inflation. tom: could you see lisa on a cruise ship doing at auction discussion at 10:00 a.m.? jonathan: i could see lisa anywhere without us. are you saying that is what is going to happen on this cruise? tom: absolutely. auctions with lisa. jonathan: is this a barge with the capacity of about 50 people? who is going to turn up for this? tom: we've got four pools. jonathan: are we paying people to come? tom: they pay us. jonathan: ok. [laughter] anastasia, roso -- anastasia amoroso, the chief investment strategist at icapital. how tough will that be? anastasia: i think the markets are increasingly pricing this in.

the markets are really just waiting for this, and i just don't think it is going to be that hard. tom: within the equity markets, there has to be a catalyst. what we are hearing is a consensus, is volatility, a slog, if you will. do you buy it? anastasia: i think you buy it. we have to have this reset, but what happens is if you look at the nasdaq, if you look at the tech shares, we already see that the markets have priced in not four where you hikes, but potentially the next eight. the extent of the correction we have had is already accompanied for 200, 250 basis points of the rate increases. so i do think it was a little bit scary going into the year, going into november because if you look at the valuations of a lot of these stocks, they are really off the charts, but they are not today. it also happened, a lot of money has gone out of some of the more speculative parts of the market,

and even the not so speculative parts of the market like software that is producing nice cash flows or semiconductors. so the positioning is a lot cleaner. the valuations have reset a lot lower. as lisa was mentioning, we may have a point at some point this year where we will see a peak in manufacturing activity, where we will see a peak in the reopening activity, so i do think that investors will look for things that could grow through that, and once again the focus is going to be back on secular tech. tom: corporate strengths, household strength, covid strength. let's pick on household strength. what is the household strength? anastasia: there's a lot of challenges consumers will be facing, but when we look at for example the household net worth, it is 25% above the pre-covid level, and if we look at wage growth, we sought in last friday's payroll report, i think

those things combined allow the households, much like th allow the corporations, to work through a lot of those challenges. so our outlook for this year, there's going to be plenty of challenges that we will have to tackle that will get thrown at corporations and consumers. but we are starting from a position of strength, whether it is the housing part of the net worth, or there's wage gains. we are inching very close to full employment. jonathan: -- lisa: you talked about the crypto assets and how you like these, and these could be potentially one of the most valuable areas. i wonder how that dovetails into a time when it is not offering an apparent hedge to some of the inflation, at least in tandem with gold. anastasia: we really have to disentangle how we talk about crypto and live inflation. you can make a case for crypto being a hedge against inflation. we saw that early last year when you had the fed not reacting to

high inflation and people flocked to bitcoin. i don't necessarily think that is going to be the case this year because the fed is going to start to do some thing about inflation. if you think about the s&p, that may be at best is going to do 10% this year, but you still have the other 40% of the portfolio, and a lot of that is not going to do great this year. our overall expectation for traditional portfolios is barely enough to beat inflation this year. when you look at areas of tech, areas of crypto that are growing faster, that are the type of hyper-adoption mode, we think they over time can see their prices rise. so it is not a direct hedge against inflation. but it is a question of what can you get in the portfolio that has a chance of growing faster than the market, and i do think that parts of the crypto ecosystem certainly have that ability. jonathan: big question, would you go on the cruise? anastasia: i will make one

exception to that, and i think that would be the "surveillance" legends cruise. [laughter] jonathan: thank you. anastasia amoroso of icapital. tk, your first capture -- your first passenger. tom: no, she is coming as a lecturer. emails are heating up here. what is important is this is a huge shift. you know the symphony of the seas, the giant royal caribbean fleet. this is the busker of the seas. jonathan: i am in. tom: a four day cruise. jonathan: lisa is jumping off the side. lisa: not me, everybody else. tom: david co. talk is going to be there. -- david kotok is going to be there. lisa: i think we should do it. jonathan: i need a nickname. futures up three on the s&p. nasdaq futures going nowhere. from new york, this is

bloomberg. ♪ ritika: with the first word news, i'm ritika gupta. president biden's choice of vice chair of the federal reserve says curbing inflation is the central bank's most important task in march. lael brainard says working people around the country are concerned about how far their paychecks will go. russia views talks this week with the u.s. and nato as unsuccessful, but says the kremlin will continue them if the west is ready to seriously discuss its security demands. the u.s. has set moscow must decide if it wants to resolve a standoff over ukraine or is just looking for a pretext to invade. president biden is deploying the military to hospitals in new york, new jersey, and four other states that are facing coronavirus surges. they will be used to ease

pressures on overwhelmed health centers. this thanksgiving, more than 350 military medical staff have been working in civilian hospitals. in the u.k., prime minister boris bought himself some time with that apology, pretending -- apology for attending a downing street party during lockdown. as conservative politicians who have talked to bloomberg have said they will wait for the findings of an official probe into the party. global news 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i'm ritika gupta. this is bloomberg. ♪ ♪

♪ >> i definitely see rate increases coming as early as march because it really is clear that prices have been uncomfortably high rising and uncomfortably high rates for some time, and this inflation we are seeing, we haven't had something since 1982, that is not price stability. i think every american knows it and feels it, but also the fed knows it and feels it. jonathan: that was mary daly, the san francisco fed president, speaking with cbs. your equity market is positive 0.05% on the s&p. a similar move on the nasdaq 100. unchanged on tins in the bond market debt on tens -- on tens and the bond market.

$82 handle on wti, $82.37. tom: print today, $84.47. it is going to be fascinating. we don't have time now to do not gas. annmarie hordern with us now, bloomberg washington correspondent. getting in here because she is our expert. surveillance wordle today, the letter h is correct. annmarie: no hints. tom: i want to stop and look at a washington part i don't see anyone talking about. this goes to the heart and soul of ron klain, hugely experienced chief of staff to the president. what is the biden policy process? i think a lot of democrats, a lot of republicans, a lot of americans are saying in your white house, what is the policy process? annmarie: it is a great question because it depends on what the policy is. you can see how quickly the

administration acts. we know they are trying to get out front, or they have been over the past few months when it comes to inflation, but at the same time, there's not much the administration can do. then you take another issue they are confronting, which is covid. today we will hear the president talk about that. he's going to be joined as well by the defense secretary, and they will talk about the fact that they are sending military nurses and doctors to hospitals near you in coney island and brooklyn because they are dealing with an overwhelming amount of individuals who are getting covid. then you look at the economics and the timeline for the fed picks, and for that, i really don't know what the policy plan is the timeline is because there's no window into knowing when we are going to get those. we are told one date. that came and went. we still don't have it yet. i think this is issue dependent on how quickly they move. tom: do we have an understanding of how the president is involved

in the policy to filament of the white house? i think with president trump, we all had a pretty clear idea of president trump's day. it's president biden younger bush, where he is up at six clock a.m., let's go, 12 meeting? annmarie: we do know every day we get a briefing release the night before on what the president expects for the day. we know the president is likely here all sides of an argument for a policy discussion which is sometimes why potentially we think they are dragging their feet, but really they are just going through all of the nitty-gritty details before they make a final decision. today he will begin with his brief. he's going to be making that speech on covid, and then he is taking a trip to his old stomping grounds on the hill and having lunch with democratic senators to try to gain some momentum when it comes to voting rights. lisa: meanwhile, we started the conversation when it talks about

oil and natural gas, and i do wonder, president biden's policy one it comes to nord stream 2 because senator bob menendez came out and proposed sanctioning nord stream 2. this has a lot of support from other members of congress, including president biden, at the same time he is trying to talk to russia, and this is only going to torpedo some of those talks. what is the process going forward, especially given the tenuous relationship with europe and germany at a time of gas prices going up so much? annmarie: we could expect a vote on this today. you are right, there is a menendez bill, which says that of russia was to make a play on ukraine and breach that, than they would want to sanction the company behind that. then there is the senator cruz bill. this was drawn up between senator cruz and senator schumer because senator cruz was blocking many of biden's picks

for state department and a number of foreign posts, so they said we will have a vote on nord stream 2, but cruz's bill would want to make sanctions immediate on nord stream 2. biden adminstration is saying we don't agree with nord stream 2, but at the same time, we struck a deal with germany they would make sure they would cut off nord stream 2 and access to that if russia does in fact breach ukraine. so a little bit of a nuance of two different bills and how the administration is looking at it because many democrats are saying we are in the middle of these negotiations. we heard from the quinlan today that negotiations were pretty much meh when it comes to nato talks, but democrats are saying why poke the bear when we are in the heart of negotiations right now with moscow? jonathan: the british house secretary has wrapped up and address in the united kingdom moments ago, saying the isolation period would be cut to five days from seven in england, in line with the guidance we had from the cdc a number of weeks ago.

he's gone on to say the u.k. is leading the world in learning to live with covid. it seems like a lot of countries around the world are leading into that pretty forcefully over the last couple of weeks. do you expect to see the same thing from this administration? annmarie: there was about six scientists advising the president on his campaign trail, and in a number of articles in scientific journals over the past week and a half, they have come out saying just that, thinking that the president needs to make it a little bit bolder in terms of the response of covid is not going away, and we need to live with it. i think step-by-step, you seem much of that coming out of the adminstration. they want to make sure schools are being opened and they are going to try to alleviate some of those teachers concerns with sending more tests. they have not been very emphatic about it, but i think you will see some of the nuances in the tone and the language start to change. tom: britain is doing it better than us. that is where i am on this. annmarie: last week, britain as

well had to send their military to london hospitals given the spike, which we are doing this week. and it is a much smaller population. the one thing the u.k. has that the united states does not is a national health policy. you have an nhs number. when i was waiting for vaccines when i lived there, i popped that into a website and it told me when i would be eligible. we just don't have that kind of system yet. tom: what we have here is someone who plays wordle better than you, jonathan ferro. jonathan, you knew it was rishi. is rishi in the timeout chair? jonathan: you want to talk about some thing else, it seems. rishi sunak, the chancellor, are you suggesting he was behind some of the details coming out over the last couple of months? tom: i don't know. it just sounds like he is in the prime minister timeout chair. tom: tell us what you really -- jonathan: tell us what you

really think, tom. tom: johnson is not theresa may. he's going to survive. is that the basic line? jonathan: he hopes. the polls are starting to shift in a way they have not done in times gone by for this prime minister. keep an eye on the polls. futures up 0.1% on the s&p. unchanged in the bond market at 1.4347%. this is bloomberg. ♪ ♪

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♪ jonathan: a couple of hours away from the opening bell. this is "bloomberg surveillance. your price action" positive just about come up 0.1 percent on the s&p. the nasdaq up a similar amount. the relationship between this and this. switch up the board. the treasury market, your -- the bond market, your 10 year up. your two-year by almost 20 basis points on the year. two's right now at 92 basis points. we have done a lot of work already going into that inflation report. the conversation we have to have already is where is the upside surprise going to come from. when you look at the bond market

and its relationship with equities, where would you like your bank exposure, if indeed you would like some? switch up the board and look at the bank performance year-to-date. the united states and europe. on the euro stoxx 50, the banks up 8% year to date on the s&p 500. the banks there up by more than 10%. we keep having this conversation. how much more can this fed do relative to what is already priced? in europe, is the bar for the ecb just a little bit lower as that rate hike conversation starts increasing? tom: no question, europe is a little bit lower. i thought that was very smart the other day. to me, i am going to say this, and i really mean it. tomorrow, it is fascinating when the statements come out. they are going to hide how good things are. jonathan: using this is a political problem, apr issue. tom: apr issue is the way i would put it. they are just bang on. they are doing great. tom: isn't it -- jonathan: isn't

it a reflection of how well the economy did? is there a problem with that? tom: no. we can use that on a theme on the cruise. [laughter] jonathan: i do think the bigger issue some of these banks might have is with their staff. what are they going to do with comp? if you spent a long time saying to people every single year, here is your increase base, of 2% in line was inflation, and this year when you are delivering 7%, what are you telling them? tom: i think you are telling them what morgan stanley told them the other day. they may partition compensation, but they have to react. you see it in other industries as well. amazon having the same challenge. jonathan: which is why people think the veritable comps will be massive. what do they do with the base? i think that is going to be interesting. lisa: if you do the beige book yesterday and parked through some of the details, it showed that new york city area core

inflation was up 6%, so if you start taking a look at that, you start saying what are people going to have to demand just so that they don't get a pay cut ineffective real terms. jonathan: these are high-class problems. i will preface what i am about to say with that. did you see the rental increases on doorman buildings in manhattan? away from that, your banks are up. not personal for me. i am renegotiating into next month. [laughter] i'm hoping the landlord is not watching. tom: invite your landlord on the cruise, jon. jonathan: i will invite him on the show. we will have a nice little chat. let's get you some single names. sagan morning to romaine. romaine: three of the five biggest movers in the aerospace sector. bloomberg reporting that the return of the 737 max in china could happen as soon as this

month, based on some reports that a test flight was don january 9, the final phase of this recertification would be training the pilots based on traditional timetables. that could happen this month. shares of about 2.5%. as boeing goes, so does its suppliers. those shares up about 2.7% in the premarket. we got readings out of delta airlines. l to stop moving higher to present. the company saying q1 is going to be a little bit rocky. it's delay to a return to normalcy going to be about 60 days. but second quarter, it will have healthy profits and beyond. we will take a look at that hopefully see whether delta can make good on that. we should point out that the cruise lines, royal caribbean was actually higher in the premarket about 30 minutes or so ago. it did drop into the red. my have taken some bloom off the rose there. if you want to move into a house and not at that doorman building

, you're going to pay through the nose for it. arjun's were great. shares of about 8% in the premarket, and a downgrade for snap over at cowan. tom: thank you so much. to close this afternoon, a nice precursor into bank earnings tomorrow. right now, and this is incredibly well-timed, jim o'sullivan joins us, chief u.s. macro strategist at td securities, and his acuity is so great. he is perfect for ppi. you and i know that the world stops for ppi 20 years ago. why did we fall out of love with ppi analysis, and what does the producer price index mean this thursday morning? jim: good morning, tom. ppi is to some extant a leading educator -- leading indicator of what to expect at the consumer level, but the number has been so volatile since they put services in the data couple of

years ago that they have really become almost two volatile to be that useful on a month-to-month basis. when you look at the trends over time, that number shows a pickup , so it has broadly captured the pickup in inflation, but i would say the ppi with the inclusion of services in recent years has just been so volatile month-to-month, it hasn't been that useful for forecasting cpi. we already got the cpi yesterday, so it will not tell us much about yesterday's cpi report. tom: that is an incredibly important insight. the stereotype is ppi's manufacturing, and mr. o'sullivan nailing it there with the service sector addition in number of years ago. what did you learn in the service inflation dynamic yesterday? jim: certainly the rent numbers were up pretty solidly. that is a key part of the services numbers, and that has got the attention of the fed. the fed chairman has mentioned that specifically. we have seen clearly a pickup in

rents. the story in general for inflation has been that what we have seen has been more than accounted for by goods. that is where the supply chain issues come in. that is where the big surge in demand fueled by fiscal stimulus , expanding his people shift from goods to services, although if anything, the rent number yesterday, if you look at the second decimal place, was a little bit slower than the previous couple of months. notwithstanding the story this morning about new york city apartment buildings. lisa: challenging some of the numbers we have been seeing coming out of the official fed forecast. taking the inflation dynamics and dovetailing that into fed policy, you called for to rate hikes this year, and then qt beginning, and that being the third move. and you talk about why that is going to be the third move in use perhaps in lieu of a rate hike? jim: we actually have three

hikes in total, plus qt this year, to moves in march and june, and then qt, and then another rate hike in september. we've got to be pretty nimble and humble with our fed forecasts, and obviously we've had a change that had to change those numbers as the fed has talked increasingly hawkish leanne the numbers have come in. but it is pretty clear they are telling us the plan is to go in march at this point, and the implication is that they follow on that again. once they start, it is pretty easy to come back on a quarterly basis with a move. certainly in 2017, they did effectively substitute one rate hike with the start of qt, so our sumption is the same this time. but they are certainly hinting that the start of the qt process , the tightening will come

earlier than it did. the third move is the start of qt. lisa: do you think that quantitative tightening will be disruptive to the market, more so perhaps than the market is currently pricing in? jim: it is disruptive in the sense that -- not necessarily in the sense that they will communicate it very effectively. they will probably give us the exact game plan. they will start at this level for a month, build it up over several months. it is going to be bigger as a program than last time. but it is going to be gradually faced and well communicated. the fed is really meaningful, we feel, so it will put pressure on bond yields. that is part of the intention here. jonathan: jim o'sullivan of td, thank you. what a year ahead for this federal reserve. just got you some data from miller samuel and douglas

element -- and douglas milliman. none doorman buildings were up 7.8%. if you don't have a doorman, those renters are still lagging behind 2019 levels. isaac that is pretty interesting. that specific market in manhattan has not recovered. tom: my take on the analysis, and for those of you worldwide, we are focused 24/7 on the ridiculous real estate market here. you are right, it is hugely partitioned. some segments exploding and others pretty quiet. jonathan: 23%, that is quite a climb. lisa: what i like is who is moving back to new york city and who is leaving. the people who are actually wealthier, white-collar workers are coming back, looking for the entertainment come of socialization, the culture, whereas people who are lower salaried individuals can't afford it, and frankly probably were hit harder during the pandemic as some industries don't recover.

so i think it is the bifurcated nature of the recovery. jonathan: that is the frustration of the leadership on wall street. if that is true, what lisa just described, that situation, that coming back to manhattan for the good times in new york city but they don't -- tom: if there is not a horrific variant about, it is going to be wild. i don't know when. whatever. this is just in. thank you to our staff for this. the surveillance crews comedy virtual balconies are sold out. [laughter] they give you a view of lisa doing the bloomberg terminal. jonathan: we are doing virtual balconies now? tom: you get the foreign exchange trade in your room. jonathan: management are really excited about this. i hear sales are really pumped up.

they can't wait either. lisa abramowicz, tom keene, jonathan ferro. yields unchanged on tens. from new york, this is bloomberg. ♪ ritika: tom: -- ritika: san francisco fed president mary daly and her for little for fed counterpart patrick harper have joined those calling for an interest rate hike as early as march. he tells the financial times that he supports at least three rate hikes this year. senate majority leader chuck schumer hopes to break a logjam onto voting rights bills and begin debate this week, but republicans could soon block a final vote. meanwhile, senate democrats are continuing a longshot bid to change the filibuster rules and pass the voting rights legislation. now to airlines. the omicron variant will delay a recovery in travel by 60 days,

but the carrier still expect to be preferable for the rest of the year. delta's fourth-quarter profit was a penny less than estimates. the virus and winter storms led them to cancel up to 10% of flights. taiwan semiconductor has cited the new demand for chips apple's most imported chipmaker will spend as much is $40 billion this year. 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. ♪

>> if the fed tells us later this month they are going to end

qe in january and hint that you could get the start of balance sheets rolloff sooner rather than later, and march or certainly in the first half, those are the kinds of things that could get the market rethinking if the view is that the fed is going to be more aggressive than expected. jonathan: the brilliant julian emanuel at evercore isi, looking for 5100 on the s&p year-end. with tom keene and lisa abramowicz, i'm jonathan ferro. futures up five, a little more than 0.1%. on the nasdaq 100, up 22. yields basically unchanged at 1.7411%. your next scheduled stops for this bond market, eight: 30 eastern time, ppi data, than 10:00 a.m., we have the senate banking a hearing for governor brainard's nomination be the next vice chair of the federal reserve. tom: friendly, it is going to be as interesting or more interesting than powell. jonathan: i will bring in the

pre-release quote. "inflation is too high and working people around the country are concerned about how far their paychecks will go. her monetary policy is focused on getting inflation back down to 2% while sustaining a recovery that includes everyone." they want to engineer that so-called soft landing. tom: what is important is that quote intake a committee of 20 people. jonathan: they are all on the same page. they seem to be all on the same page. tom: kriti gupta gets us started. this is an important block into the next hour, abby joseph cohen when, jane foley with us. what you have today? kriti: we are going into earnings season tomorrow. one of the biggest questions is do we start to see a reversal of that 15 year downtrend between value and growth. i just had to go one step further and take a look at what exactly in that value index is actually doing the best. if you compare with the banks are doing to the s&p 500 value index, you are going to see various outperformance,

especially in the first 13 days of the year. that is really what my chart of the day shows. i met is well just show a chart of the 10 year yield because that outperformance is really mirroring what you are seeing in the rates space, but it is not just yields pushing the sector higher. you have loan growth expected to grow quite a bit, and line with that booming economy, in addition to the fact that a lot of growth strategists have said you are going to see higher volatility into 2022, and at the end of the day, that plays into profits over at trading desks. tom: plus to talk about tomorrow morning. what new york banking will look like into 2022. jane foley coming up in the next hour. the dollar, we will dive into that now with cameron crise. the macro dollar crushed yesterday. maybe that was the right idea. give us a clinic on the how here. how do we follow the u.s. dollar if we are not expert?

cameron: you pull up your bloomberg terminal, or if you are not fortunate enough to be a subscriber, year yahoo! or whatever, and the shorthand is the dollar index, the dxy, which is heavily weighted towards the euro, i think 57%, but it is used as a sort of good shorthand for the broad dollar. if you are more nuanced you can look at the bloomberg dollar index which includes more emerging market currencies such as china, the be dxy -- the bbxy. but over the last couple of days, the dollar has broken down pretty significantly. it was in a pretty tight range from late november when it started through a couple of days ago, and has now been ejected

from that range to the downside, which was contrary to a lot of the consensus viewpoints as we rolled into the new year. tom: is it a conviction trade right now? can i say the dollar is conviction trade? is there real belief which way? cameron: i don't know that the concept of a conviction change -- conviction trade exists anymore. in the days where you had the macro hedge fund types playing for 10%, 20% moves and affects has kind of come and gone, and it is a lot more hit. let me take a percent or two off the table. in no sort of environment does it become a lot more critical. we have entered the year with the market leading pretty heavily long dollars. the first day of the year in japan, for example, japanese in tokyo at times took dollar-yen

over 116, and it looked like we were set off for some upside fireworks, and i think the fact that other popular trades, the equity market, fixed income market, really got hammered, has encouraged a bit of prediction across the board who are also quite long dollars. lisa: one reason why people say dollars will begin is because we will get this global reflation trade. you have been writing some rather catastrophic headline pieces recently. cpi is already way into economic danger zone, inflation is high, usually spells disaster. how much are we into a period where the u.s. pull have -- u.s. perhaps we'll see the first downturn off of what is happening for this inflation? cameron: that has got to be a risk. the fed has belatedly realized that there is a limit to how

much inflation you want. you alluded to the fact that real incomes are negative on a year-over-year basis, that is not a robust and happy environment. if that environment continues, it will certainly be a detriment to economic demand, and if the fed has to clamp down domestically, that is also going to have an impact. we are in an environment of constrained supply, and the only way to really break demand and supply into line is to encourage a downshift and demand, and that is a very difficult thing to do. jonathan: we've got 30 seconds. west ham leads this weekend. excited, expecting a result? cameron: we met them in the cup last weekend. we had a win against norwich yesterday. west ham is in a bit of an easy

part, so hopefully it can continue to battle on and remain in the top four where they went with yesterday's w -- yesterday's win. jonathan: that's what you are hoping for. that was just for you and steve major of hsbc. victim this weekend for you, not london derby. tom: well, it is there. jonathan: if we were going to davos, this was part of the tour. we were going to make that stop. lisa: but instead, you guys can talk about it on the cruise. tom: we've already got harry kane penciled in. we are talking about the and in tottenham. jonathan: if i get hold of the

tickets, can we take monday off? tom: i think we can. lisa: it's his decision. jonathan: lisa's solo monday. it is what everyone always wanted anyway. who's got monday off? we are going. from new york, this is bloomberg. ♪ ♪

>> to say the fed is behind the curve is putting it very kindly. >> there will be more hikes than previously thought and 2022. >> i do think they want to get to the balance sheets sooner than later. >> to question is not is the fed going to be hawkish or not. it is more can the fed still surprise on the hawkish side. >> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. tom: good morning, everyone. in this hour, you must be with us on radio andev