♪ >> earnings are going to have to drive the market here. >> valuations support is not particularly good in some segments. >> a lot of money has gone out of some of the more speculative parts of the market. >> this is an opportunistic stock pickers market, but you have to do your homework. >> this year is going to be volatile. >> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. jonathan: earnings season gearing up. from new york city, for our audience worldwide, good morning. this is "bloomberg surveillance ," live on tv and radio. alongside tom keene and lisa abramowicz, i'm jonathan ferro. your equity market down a single point on the s&p. j.p. morgan numbers out 10 minutes ago. tom: and a good opening salvo of what we are going to see per you mentioned morgan stanley, and goldman sachs i believe into next week. all i can thing about as we go to this new our was ben bernanke

saying the integrity and crisis of the financial system is a be all and end all. jerome powell and many others delivered in spades in this natural disaster, a banking system that was resilient and prospered. the big question is, now what? tom: the outlook -- jonathan: the outlook from these companies reflected in the reserve relief. things are better, helped out by the policy story of the last couple of years. but things are getting more expensive. that is why we said repeatedly this morning it is about the numbers as an employer. expenses up 11%. they attribute that at to higher compensation. you are going to see that line repeatedly through earnings season. tom: our true experts at bloomberg on banking analysis, they say it is a war of talent. we are going to see that not only now, but into 2022.

we will see how that plays out. jonathan: maybe things are just getting started. maybe this is just the beginning . lisa: here is the issue. where is the growth coming from? if you can't necessarily expand and extend credit for a valuable price, where you going to get that growth to compensate for that higher pay? jonathan: j.p. morgan in the premarket now down about 2.4 percent. equity futures unchanged. on the nasdaq, down about 15, negative zero .1%. what a morning we've got lined up for you. up three or four basis points on tends now at 1.7380. -- on tens now at 1.7380%. lisa: we have already gotten jp morgan, wells fargo. citigroup on tap for 8:00 a.m.. very much focused on the compensation costs.

how much loan growth is their right a time when deposits are still climbing? we were talking about people really eating into their savings accounts. are they? because the deposit rate is growing quite a bit. at 8:30 am, we get u.s. retail sales. again, the focus is on cost, it kind of cost which is inflation. how much is the 7% year-over-year increase in consumer prices, which it delivered at a nominal level, rather than the actual demand, which is being crimped on the edges, at least for peripheral data by consumers who are a little reluctant to spend more since they are spending more on their staples? then we get the university of michigan consumer sentiment survey. how much does this affect consumer sentiment given the fact that we have seen bifurcated surveys come out to indicate that sentiment may be is installing as much? jonathan: we are going to be

drowning in the earnings through today in the next couple of weeks as well. tom keene very keen to stay on top of the data. retail sales at 8:30. tom: there's a whole other story here, including brent crude at $86 as well. i want to talk about what has been ignored this week, and this goes into the fine broadcast, "the real yield." i believe you will be seeing that this afternoon. overnight, we went under 80 basis points on twos-tens spread , and this week has been the gentle ebb. back down we go to a flatter yield curve. jonathan: you know people would like you to make a guest appearance on "real yield." mandy xu joining us now, chief equity derivatives strategist at credit suisse. the banks have done tremendously well year to date. tech has had some trouble. say buy the dip in tech.

why? mandy: i think there's a consensus narrative that higher rates is bad for tech, and historically we don't find that to be the case at all. when the fed hikes rates, it opens the path for hiking cycles . tech is the best performing sector, so we don't find historically that when the fed tightens that tech does not do well. when you look at the back of the year, in the near term it is a headwind for tech, so on average, tech is down about half the time that happens, but if you look forward six months to a year, tech on average is up double digits and up 90% plus of the time. so overall, we are still constructive only sector and we don't think higher rates is going to be what derails the tech rally. tom: love your note, and really

fits into what jon kyl up -- what jonathan golub is talking about as well. as you say in your note, it is just about the ability to have revenue growth and to generate profit. how do you dovetail your world into the last mathy world -- the less mathy world of jon golub? mandy: we do make a distinction when talk about tech. we think the cash flow will do well, so the so-called nonprofitable tech, we think that is more susceptible to tighter monetary policy conditions, but the good quality, big tech companies should do fine in a higher rates environment. lisa: this is a broad question that gets a very different response from everyone i ask. what are we pricing and right now in equities with respect to monetary policy at a time when

bonds are sending mixed signals about the rate hiking situation? mandy: there has been a very notable divergence in the volatility market between rates and equities. rate volatility has been rising for the past six months and is currently at a one-year high, whereas if you look at equity volatility, generally it is still pretty muted. so i get questions about what is driving that. part of his wealth -- part of what is driving the volatility in the rates market is the fear of a policy mistake, the fed over tightening. in the equity market, i would say investors are generally more sanguine about that possibility, and in terms of what is priced into the market, people are expecting about four rate hikes, with the first rate hike coming in march. jonathan: it has been far too long. always enjoyed catching up with you. we've had the backward look from jp morgan. now we've got the forward look

from jp morgan. looking 12 months out, we can get the outlook now with sonali basak. sonali: it is really interesting to see what jp morgan is looking at in the future. some of the risks include the lack of a steeper yield curve, and some of the credit card trends we have seen from consumers already. the idea of them continuing to paydown balances versus taking more debt on. the net interest income outlook is probably the most interesting here, which is $50 billion this year expected of net interest income. this is not necessarily including all of the investment banks. this is a lot of assumptions using the consumer business alone. that includes credit card balances resolving to normal levels, but what is really going to be the indicator here is if that investment banking debt also ticks up meaningfully because that $50 billion estimate they have given us compares with almost $63 billion

we have seen this year, so there's a lot of room for error here. lisa: is this completely to just compete with fintech? sonali: it is interesting because if you look at the acquisitions they have made, it is things like the infatuation. it is things to make their businesses for consumers more attractive. so on one hand, yes, to compete with fintech, but also just to compete in the credit card and wealth businesses that are ever more competitive. that is 20% growth in tech investment, 35% growth in marketing, and there will be some increase this year on compensation expenses, though not as severe as those other items. jonathan: wonderful as always. looking for do you coverage in these names as well. let's talk about where the competition is coming from. by now, pay later. some real competition coming

from that in terms of consumer spending. i went on mr. porter the other day. it is addictive and highly expensive. it set up to $15,000 that you could borrow, by now and pay later. that is the kind of offer at some of these stores right now. lisa: and then check that was some of the traditional credit card fees and you start to understand the competition. this does cramp how much interest some of these banks can charge on credit cards at a time when they are increasing their marketing costs around cards, leading to a 35 percent growth in their marketing costs. jonathan: that is where some of the comp edition is coming from for the credit card business. tom: it is. this is a bank that is going to spend a ton of money on technology. they got tech and take adjacent up ash and tech -- and tech adjacent up 25%. they want to do organic growth.

dimon says that is a top priority. great. do they do with themselves, or do they acquire that modern financial tech to bring it in and almost contain it? jonathan: there's been talk of an acquisition for a long time over at j.p. morgan. they have gone in a different does >> than morgan's -- a different direction than morgan stanley. do you think this is the year? tom: that is a really important question. we only get that answer at the davos david morgan party. jonathan: they are not going to have that party this year. in the summer, we might. tom keene, lisa abramowicz, and jonathan ferro. futures down 0.2 percent on the s&p, down 40 on the nasdaq 100. heard on radio, seen on tv, this is "bloomberg surveillance." ♪ ritika: with the first word news , i'm ritika gupta. more signals that the fed is set to raise interest rates in the coming months. president biden spec for vice

chair of the central bank lael brainard told a senate hearing that rates could be increased as early as march. fed governor crist for waller said that three rate hikes this year would be a good baseline. for a second time, australia has canceled the visa of novak djokovic. the immigration mr. overrode a court ruling that temporarily prevented them from deporting the tennis star. a new study out today on the omicron variant from south africa, where it was first detected. researchers say omicron causes less severe disease and the delta strain even in those who are unvaccinated or have not had a prior covid infection. that adds to evidence that while omicron is more infectious, maybe less harmful than some of its predecessors. sanctions aimed at stopping russia's nord stream 2 pipeline.

opponents also said it is necessary to attain sanctions in order to prevent a russian invasion of ukraine in the future. the loyalty of cathie wood's fans may be finally winning. the selloff and speculative tech stocks has had a miserable start to 2022. investors pulling $352 million from wod's -- from wood's flagship arc innovation. 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 certainly have not stated that we should do climate stress tests. in terms of supervisory guidance, we tend to do is ask large institutions in particular , do you have a good risk management framework for assessing all of your material risks. we would not tell banks which sectors to lend to her which sectors to not lend to. jonathan: that was governor brainard, lined up to become the next vice chair of the federal reserve. from new york, with tom keene, lisa abramowicz, i'm jonathan ferro. the nasdaq down 0.2%. into the bond market, yields higher by three or four basis points at 1.74%. if you are looking at jp morgan,

the numbers out about 30 minutes ago. as we have been talking around the desk, these banks and these numbers this morning capture so much about the stories of this moment. rates are going up. look at the performance of the names year to date. the health of the economies have improved. it is getting more expensive to keep people. look at the expense line. 106 to $2.90 in the premarket, jp morgan down 3% -- 100 $62.90 in the premarket, jp morgan down 3%. tom: james dimon is going to listen to the computer scientists from the university of dayton. here is a name you don't know. lori beer is maybe the most important pair -- important person at fortress dimon. they go to a $12 billion spend forward from $11 billion. they are spending way above where they were in 2019, and

that outlook is there five-year manifesto forward on technology. jonathan: that has been the story of the last several years. don't you think the story for the moment, the fresh input is compensation? tom: absolutely. there's no question. this is not about fancy investment bankers living in 6000 square feet in tribeca like you. this is about -- it is hard to say that with a straight face, folks. jonathan: people are going to be searching for me on the wrong side of canal street. carry on. tom: i think you are dead on about compensation. it is fascinating, particularly for the wealth managers. what is so important about what ken leon said is citigroup wants to be like ubs. how do you meet compensation with a profitability structure of wealth management versus banking global monster like jp morgan?

it is a different world. jonathan: this is a challenge across every single industry, not just the banks. these are the conversations they got to have after a decade plus of saying here is your pay rise in line with inflation. here is 2%. 2% is not going to get it done this year. everybody watching this program, listening to it knows this is true. this is not about banker pay getting bumped up to $100,000. this is about people in the middle who have had the work pushed up to them from below because the people joining these banks are getting paid more to do less. they do not want to do that workload anymore because they cannot see the upside for the career in the same way they used to, and the people in the middle are getting the work pushed down from above. they are the people pushing very aggressively to get pay rises this year. tom: i've got bad news, annmarie hordern is pushing very aggressively as well. i just got an email, if you don't give her airtime, she's going to have a wordle tantrum.

good morning. i want to talk to you exactly what we talked to emily wilkins about. his president biden making the miscalculation of his tenure by emphasizing the left versus the center? annmarie: if you look at what greg valliere wrote, i knew you guys all looked at his note today, clearly what many think is this is potentially one of the worst weeks so far for the president, given a number of setbacks. when it comes to the fed picks, he is clearly giving a nod in mollifying the progressive left, especially when it comes to sarah bloom raskin. we have already heard from senator toomey, the top ranking republican on the senate banking committee. we heard from him again this morning in a statement -- or last night, after those pix were announced. while he said he is going to look into mrs. cook, mr. jefferson, it is really his thoughts about her in terms of her writings about climate change and the worry that she would use the fed to try to

choke off funding to traditional energy companies. so her confirmation could be very difficult not just for republicans, but some democrats like senator joe manchin of west virginia that come on heavily reliant energy states. tom: a highly reliant energy state. he is still mollifying the progressive left. how does he swing back to the center? i don't see how he does that before the sunday talk shows. annmarie: i don't see how either because the sunday talk shows are in 48, 70 two hours. potentially gives him a little bit of that opening. he's going to be talking about roads and bridges, heart infrastructure, things that many in the moderate camp or even the right are in favor of. he's going to be introducing the $5 billion for bridges today. it is the 60th day since that infrastructure bill was signed into law by the president. potentially this is his way to try to shift the conversation away from voting rights, away from fed picks, and onto roads,

bridges, and broadband. tom: to me, what is going on here is he can't talk to the center because they are all retiring. lisa: perhaps that is the case. right now, i want to pick up on what you are saying. sarah bloom raskin and how she will be difficult to confirm. she has been really vocal about banks and crimping down on some of their lending. we are getting bank earnings right now. how much does the message of banks are bad for making so much money actually resonating versus banks successfully marketing themselves as part of the solution during the pandemic? annmarie: i think that is a difficult tea there was a lot of appreciation for what the banks were doing, given the fact that a number of people were having to leave work, working from home, and the banks really stepped in. but it is very difficult for politicians to really get behind wall street, especially when you see numbers like $1 trillion attached to some of their management of money.

when it comes to sarah bloom raskin and her thoughts on regulation, renumber the progressives were really unhappy with randal quarles. they thought he was way too lenient on banks. schieffer sure is going to rule a little more with an iron fist, and that is certainly going to get the nod from the likes of elizabeth warren, who we know was supportive of this nomination. jonathan: was that another airtime? that is all we need to know. annmarie: we did not talk about djokovic. jonathan: do you want to talk about him now? annmarie: he was denied for a second time, and i think in tennis that is called a double fault. but we don't know where he does next, what happens. does he just go to the airport and leave, or as he owing to continue to fight this out? tom: seriously, it is done? jonathan: the minister has made the decision, but there's kind of this who knows vibe to this now. does he appeal again? is there another hearing? he's got a game to play monday.

we will see if he shows up for it. great work as always. coming up, the brilliant seth carpenter of morgan stanley on this economy, with retail sales one hour in five minutes away, and some citi earnings to get your teeth into as well. good morning to you all. this is bloomberg. ♪

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♪ jonathan: we have got a ton to get through this morning. about one hour away from retail sales. j.p. morgan and wells fargo numbers behind us. in front of us is citi. futures on the s&p down about 0.25%. on the nasdaq, down 0.4%. on the s&p on the session, we are lower. on the week we are lower. want to talk about the banks year to date. what a run it has been for the s&p 500 banks. you to date, up more than 10% in today. we will talk about jp morgan in the premarket in a little bit with romaine. the health of this economy has improved. look at the reserve release. that has been a story for 70 people. the stocks have rallied aggressively. look at the projection for interest rates and the expense line.

this story about wages and compensation is not going away. this is just the beginning. you see it very clearly from jp morgan this morning. lisa: their expenses really driven by the wages going up. i'm struck also by the price reaction and their shares, down nearly 3% in premarket trading. is this story of higher comp priced in. jonathan: and is the story of higher rates priced in? in two weeks, we've had about a year of performance on the s&p 500 banks. they are up almost 10% plus to 11. tom: to me, to dovetail this into the economy, the biggest surprise of the week are the pro epidemiologists saying omicron is going to end fast. how does that change dovetail into the mathiness we are talking about? jonathan: in the previous hour, we talked about cheap grace it -- about etsy graphic --

about betsy graseck of morgan stanley. this stock has delivered in a big way as well. two's, tens, and 30's going into retail sales a little bit later on. the 10 year, 1.7 415%. we had a little look at 93 earlier on. let's get you some single names and kick things off with those banks and kick things off with romaine. romaine: one of the bright spots over the last couple of weeks has really been the banks. we did see a decent rally heading into these earnings. jp morgan shares down almost 3% in the premarket. let's keep in mind they missed on fic trading, they missed on equity trading, they missed on equity underwriting. there were some bright spots with regard to the investment acting unit, but as you have been talking about all morning, this isn't just about the revenue jp morgan pulls in. it is about the payout they are having to make to retain some of that talent.

business expenses higher as well. it will be interesting to see what they talk about on the call with regards to how persistent some of that is going to be. wells fargo much more built about loan growth. they saw some of that loan growth in the most recent quarter. we should point out we saw some pretty healthy spending with regards to credit cards, and also auto loans, but auto loan growth was premier league driven to the value of those individual loans rather than the volume itself. we saw drops with regard to home lending, as well as some of the personal loans. those shares up about 2.7% right now the premarket. the cfo is going to be only close a little later today. first republic had some decent earnings as well, up about 1%. a couple of other things to keep your eye on, guggenheim shares down 1.5%. the casino company's doing well if you wanted to get trip over to macau. new rules putting the cap on the number that is good for the

companies that already have a presence there. tom: thank you so much. greatly appreciate it. there are all sorts of ways to go here. what we are going to do now a step back and go deeper and richer. you can do that with seth carpenter, global chief economist at morgan stanley, who has not looked at the cursory of trade, but may be tearing a page from princeton, seth carpenter has really dove into the dynamics of trade. we are going to go beneath the headline data. i love your work, your calculation of the supply mess we are in, and you go to intermediate goods. what is an intermediate good and the complexity of that for america and china? seth: thanks, tom. intermediate goods and why they matter for trade, they are not the finished goods that are going to get sold. they are the inputs to that production, so if you think about the manufacturing that

actually gets done in the united states, you've got to get the raw materials somewhere. you can sometimes do it from base materials, but the final assembly gets done using parts that were partially made in other countries, and those are the intermediate goods. tom: do you predict forward boy had trade as a general global statement that buoys all nations? seth: i think that is an open question at this point. the trade really did roar back as we were coming out of covid, and it was led by consumer goods. we all know a big part of what went on with inflation was big demand for consumer goods being choked off somewhat by a less elastic supply term, but goods trade came back a lot. capital goods and intermediate goods started to take over. we have now started to see a little bit of a slowing in trade for goods. services are coming back except for tourism, so that is going to be key. that is the real question about

what happens with omicron. does it fade out quickly? is it denying over the next quarter or so like everyone is hoping for? we started off with trade in goods. we hope we will get a shift to trade in services. lisa: one thing under the hood is you see signs of trade disruptions easing, which is something people have been waiting for. how quickly will the ease and allow some of the disruptions that have been really feeding into inflation to abate? seth: that question is just 100% for the inflation debate, and as a result, the central banking outlook and everything. we constructed this index taking a lot of different series that relate to comply -- relate to supply chains. over the past month or two, those supply chain constructions have started to come off. if you think two things are causing these frictions, the supply side itself and the

really strong demand, maybe we are starting to see and easing in the demand side of things as well, and that is going to ease some of these frictions. we think we have turned a corner . how fast we go back to normal is a very difficult question. we are optimistic that by the end of 2022, we will be close to normal, and if that is the case, inflation should start to come off over the course of the year. but over the past six months, inflation pressures have been higher and more persistent than expected. lisa: which really dovetails into the story we have been talking about with the bank earnings. the idea of higher compensation and wages picking up where supply chain disruptions left off, and really adding to some of the inflationary pressures. do you think that people are correctly pricing the wage increases that we are expecting to experience later this year? seth: yes, to a large extent.

what we have seen over the past year is that prime age labor force participation has actually gone up by over 1%. we expect that measure of labor supplied to continue to rise over the course of this year. that does not mean that wage inflation is going to go away. it just means it may not be quite as bad as people fear. tom: when we say wage inflation, the dreaded wage spiral, is it wages, or is it benefits as well? seth: it's got to be a combination of things from the business perspective when you are looking at the bottom line for businesses, and so what my colleagues in the equity research group are thinking about is that both equities and wages can take away from the bottom line. i think what gets more challenging from a big picture, top-down perspective is what role do they play directly feeding into consumer price inflation. they tend to move together, that is for sure, but we did some

work a while ago that if you look at what the impulse from wage inflation measured as wages going into price inflation on its own, there's actually been less and less of that effect over the past few decades, so that is another reason why i think we are slightly on the lower end of the distribution in terms of forecasts for inflation at the end of this year. lisa: how closely are you watching the earnings season we just and bark upon? seth: i luckily it to step back a little bit from the fray. he mentioned my colleague's call for wells. for me it is a really great season because i get to learn a lot from my fantastic colleagues in equity research and try to make sure there aren't any tweaks we need to make or macro outlooks. jonathan: seth carpenter thereof morgan stanley, thank you. a truman this 12 months, to be fair to wells fargo, but some of

that move concentrated in the last couple of weeks or so. here are some numbers from blackrock in the last 60 minutes or so. assets under management, $10.01 trillion. robin wigglesworth at "the financial times," fantastic author of "trillions," tweeted this out. "the combination of rising markets and stronger flows meant that black rocks assets under management had climbed $1.33 trillion last year. that is the equivalent to adding an entire schroders, almost an invesco or t. rowe price, and three janus hendersons." tom: you look back at all of the conversations, and i did a thing with the late john vogel that was absently brilliant. as you correctly state, it is not about the moment. it is not about the year. it is the cumulative thing that

john golub at vanguard did, and it accumulates up. where are we going to be in 10 years? jonathan: no idea. those numbers are just massive. lisa: the compensation expenses over at blackrock rose 16% for the quarter, almost 20% for the year, so expenses there are rising as well. jonathan: can you imagine if bob diamond was still at barclays and managed to keep hold of that passive business? can you imagine what they would have looked like? tom: there's a lot of that. jonathan: just amazing. lisa: are you rubbing it in? jonathan: no, just looking back. i was talking to bob about it over the years. just amazing. tom: you've got 6000 square feet in tribeca, and i think you've got 8000 right next to you. jonathan: i've got people already writing in. don't encourage it.

this is bloomberg. ritika: with the first word news, i'm ritika gupta. the u.s. may have rejected president biden's mandate for -- the u.s. up in court may have her check and president biden's mandate for covid vaccines are testing, but they may have to implement when anyway. bloomberg has learned that president biden plans to nominate sarah bloom are to be the fed's top banking regulator, seen as a nod to progressives who wanted someone more pro-regulation. the president also plans to name two economists to be governors. north korea appears to have fired two short range ballistic missile after kim jong-un's regime warned it would take stronger action after the u.s.

impose more sanctions earlier this month. north korea conducted two separate lunches of a new hypersonic missile system. it is the latest sign of momentum in sap's turnaround plan. cloud sales accelerated faster than excited in the fourth quarter and rose 28%. sap is pushing customers to migrate to the cloud and adopt a suite of new products. 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. ♪

>> investors are starting to move away from fixed income.

i worry much more so about individual investors, many of whom have not yet figured out the damage that could occur to their personal portfolios as interest rates begin to rise. jonathan: a clinic, as always, from abby joseph cohen when. from new york city, with tom keene, lisa abramowicz, and jonathan ferro on this earnings day here in america, with jp morgan leading the way. citi still to come. yields up to 1.7345%. equities down 18, -0.4%. a big story this morning on wall street. people are getting paid a lot more. tom: we are going to waitress it a good to give us a big change. i thought it was fascinating, what we see at ubs. we are scheduling that here in about 12 minutes. retail sales at 8:30. there are points where you stop, and a decade or so ago i was interviewing someone at the

united nations and stopped when he tried to explain to an idiot like me what you spend on food in cambodia. here's the math. you spend 70% of your income in cambodia on food. it is not the united states of america. kriti gupta gives us perspective. what you have? kriti: i'm a good looking -- i am looking exactly at those food prices that go back on a monthly basis to the highest level since 2010 and 2011 to really highlight just how extreme the move is. the last time we were at these levels, there was a gigantic food crisis in the world. you had droughts. you had a crop crisis in russia which is one of the major wheat producers of the world. to see that kind of extreme move really tells you this is going to be an issue that affects the bottom line of a lot of folks. to bring it back to the united states, to also have retail sales coming up at 8:30, that is gong to be crucial because in the last dataset, the biggest contributor was food prices. tom: i am usually guilty of an

elite perspective where food is an afterthought. it is not, even in america. it is not an afterthought. kriti: that is totally true. i am looking at mexico, for example. if you look at their inflation numbers, they had to hike more than perhaps any other em country. the biggest driver of that, and colombia as well, where fresh food prices. albertsons says the majority of the transportation costs are coming from fresh food prices. lisa: one of the concerns right now is how inflation crimps growth. how much is a symptom of a positive economy? how much has the higher cost of ace items that people buy crimped their demand for other items, or not, as we may see in about 40 minutes with retail sales? kriti: it has not yet, and that is the concern going into 2022. use to have the effect of that fiscal stimulus. there are still savings people

are drawing upon. they are able to spend money on clothes and food. but when we talk about the impact of what is actually driving disinflation, it is a little bit of a chicken and egg situation because you do have supply chain pushing the cost higher, but you also have demand pushing it higher, so you have this double whammy that ends up with higher prices overall. that is going to be a story you see in the oil market as well. you see it in the food market, and you are seeing in and things like furniture, and other consumer products. lisa: you look at some of these underlying economic trends and dovetail lid into markets. what we saw from jp morgan an unexpectedly high rise in compensation costs and expenses, which some people are wondering about. how much, from your discussions with analysts, have people accurately priced higher wages, higher input costs in corporate america and beyond? kriti: they have definitely priced in the higher input costs. the wage costs is where it is getting tricky. if you look at the earnings story, i'm going to look back to

the third quarter because we are still getting the fourth quarter results out. a lot of these companies have price and higher commodity costs because they could do that which forecasting it to 10 years ago in the post-recessionary period that followed 2008. what they can't do is pricing wage costs because there are wage costs or get theirs a very high quit rate. you are also seeing the fact that there is this trend where people are actually working not typically into the office, and that is something you can't exactly quantify. that is something you have to do play-by-play. tom: what are you looking for next week? her charts, she's got like 47 and reserve at any given time. what are you looking for next week? kriti: i want to look at the commodities story. beyond oil. you were going to look at copper. you are going to look at aluminum. those russia talks are still going on, and that is going to be a big price factor into aluminum specifically.

tom: pro "surveillance" tip, quote copper off the lme or the guy with the british accent will have a tantrum. jonathan: it is usually you. you get more upset about that than i do. tom: i don't know, there's chicago folks and there's london lme. a smart note this week on copper. is it dr. copper? kriti: it is dr. copper. did you see that story that there were electricity outages at the lme that affected prices for a hot second? tom: they had to move to the dorchester hotel? that is amazing. [laughter] jonathan: this is the only reason tom ever brings up the london metal exchange because i've -- because of lme week. he once to go back to the parties of yesteryear and go to the dorchester. lisa: how much of the mentions are simply to get a road trip? jonathan: that's what all of the mentions are ever about. tom: i am with my entourage, and

one of the numbers of the entourage got a yellow umbrella. it was in her drink. she still uses that i'm braylen the rain -- that umbrella in the rain. jonathan: i thing she's our manager, too. with equity futures down 18, we are down 0.4%. tom: the tang is good today. jonathan: yields climb back to 1.7327%. citi still to come. we have had jp morgan. we have had blackrock. there is a theme already for this earnings season. we had some pretty decent insight into it for the fourth quarter. wages are going to be up big. lisa: i keep asking whether it is priced in because jp morgan shares are down, and there are questions about whether it is worthwhile. i am curious to see whether citigroup and wells fargo, which is up a bit and premarket trading, their headcount dropped more than expected.

i wonder how much lower overhead factors into that. jonathan: to be fair to larry fink at blackrock, i think he got ahead of a lot of this. the quote we read out this morning, that starting back in september, base salaries rose 8% for staff at the director level and below. that was the story of the end of last summer that came out and larry fink talked about it. he just sat across the board, director and below, 8%. let's go. i think he got ahead of this in a pretty decent way. tom: on the break, i was thinking that while you were talking to lisa and not to me. there's no question larry fink absolutely nailed that. to be honest, i need labor basis, bb he is the executive -- on a labor basis, maybe he is the executive of the year. jonathan:jonathan: everyone else simply chasing their tails. lisa: how much was that jp morgan/jamie dimon's reason for coming out and saying this wage increases unlike anything i have

seen in my career, like you did this week? jonathan: that is what we need to talk about. who is scared of a wage spiral? i would say economists and ceos. me personally, not afraid. i think they are great. [laughter] yields 1.73%. futures down 0.5%. this is bloomberg. ♪

♪ >> there's going to be a push pull between the fear of the fed and the fed moving off ultra accommodation. >> it is pretty clear the plan is to go in march at this point. >> they want to get to the balance sheet sooner than later. markets are a bit underpriced for an increase in the terminal rate. >> the stock market has been extraordinarily skeptical of the fed. >> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. tom: good morning, everyone. jonathan