give this year, and it might be margins. >> i think we are headed for the tightest labor market since the 1950's. >> we expect the labor market to continue to rise over the cause of this year. >> the fed will have difficulty rising rates -- will have more difficult he raising rates rapidly than the market believes. >> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. jonathan: 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. futures up 13 on the s&p, up 0.25%. anka of america earnings behind us. morgan stanley still to come. tom: i am really fascinated by what they do. they've had these acquisitions, including eaton vance.

i am distracted by parliament. i will suggest that a lot of banks out there want to copy what james gorman has done an excel at wealth management. jonathan: the effort is to do these things organically, whereas james gorman has gone in a different direction and made acquisitions. there's acquisitions at the time to see mick -- the time seemed expensive, now not so much. tom: many people would say he has been bank executive of the decade. maybe mr. dimon will give him some competition on that. to mike mayo's comment, it is easy to do this stuff. then you've got to execute. is morgan stanley executed? -- is morgan stanley executing? jonathan: and the cost story. asked numbers in a decade or so at bank of america.

lisa: frankly, how much of that is got that check -- how much is that going to be a driver? there are some nuances there. but to me, how much is this ultimately a story of we have not accurately priced in wage increases at a time when they see stickier and people thought? tom: jonathan: i believe -- jonathan: i will leave this decision to you. are we going to head to parliament? tom: you've got to frame this for us because we are worried about the senator from west virginia going across the aisle to mitch mcconnell. new do it differently in the united kingdom. jonathan: there is a conservative mp about to walk across the aisle. let's take a listen. >> thank you, mr. speaker.

latest evidence and research shows the u.k. is the most attractive country in the world amongst young people across the g20. amid intense soft power competition from other countries, including china, can the prime minister assure me and other members of the british council all party group that the government will meet the british council's requirements to ensure it does not have to close anymore offices overseas, and to ensure -- tom: jon, this is inside baseball. why are we doing questions on inside baseball? jonathan: the line of questioning won't continue this way as things proceed. tom: they stand up. is it like they wave at the baseball game when the red sox are losing? jonathan: there are issues around whether these parties

were held during lockdown. there's a full inquiry and investigation being carried out by senior civil servant. once we find out the details, the prime mr. has a decision to make. will he be able to hold on that long? people have been protesting the prime minister and ultimately maybe forcing him to resign. you mentioned the mp crossing the aisle. what has happened supposedly, according to opposition party leader care starmer, is that christian whitford -- leader care starmer -- leader keir st armer, is that christian woodford, a tory mp, is heading over to labour. they are in the class of 2019. you have taken the seat off of a labor pop -- a labour mp, and

then this has played out in the last couple of weeks. that is the concern many people have. as for keir starmer, i am guessing that line of questioning is very different from what you heard moments ago. tom: the chancellor of the exchequer is worried about southampton and man city this weekend. he doesn't have the prime minister's back, does he? jonathan: i am not sure. i think a lot of people think he's going to throw his hat into the ring if we have a leadership contest on the road. i think that is someone who a lot of people will think would be one of the favorites. are we done here? i think was got to talk about this equity market. futures up 0.3% on the s&p, up 64 on the nasdaq 100, 0.4%. yields unchanged on tens. a brief break of 1.90 percent. crude, $86 $.41, up by more than 1%. jim bianco, founder and president of bianchi research --

of bianco research, joins us now. what do you make of it? jim: it has been a huge move and a tremendous total return loss. i think the move that has been most surprising has probably been in the front end of the yield curve. right now with the 2-year note over 1.05%. have five rate hikes priced in. ash 1.0 5%, we have five rate hikes priced in. -- 1.05%, we have five rate hikes priced in. a couple of people have said that might happen, but their viewed as outliers. what the market has priced in, most people don't believe that is what is going to happen. i think they are going to come up for a rude awakening because the market gets what it once, and if it wants five or more rate hikes, it is going to get it one way or another. lisa: how does a rude awakening play out in markets? jim: i think what you are going

to see happen is as the fed starts to continue to get tighter and tighter as it responds to inflation, and then we start talking about quantitative tightening, i am in the camp that believes quantitative tightening most hurts risk markets like the equity market. the bond market had a $1.5 trillion buyer and the federal reserve. if they are going to leave and start quantitative tightening, it needs to five a 1.5 trillion dollar buyer any private sector, and the market will. it will take it away from the corporate bond market and the equity bond market -- or the equity market, and i think there's markets are going to struggle, as they have through the balance of this whole tightening cycle. tom: on a real yield basis, the 10 year german nominal goes to a positive statistic. can you frame that the real yield, the inflation-adjusted 10 year here, can call back to a positive level? jim:jim: that is going to be a

tall order, dependent on how you want to measure it. we've probably got about another 80 or so basis points go in order to get it real, and that is going to be tough for the market to do. if you want to talk about an actual one, where you have the 7% inflation rate, that is probably not going to happen any time in this cycle. that is where i think the problem is going to be. as the fed raises rates, the question is going to become what rate do they go to? the fed history as they break something when they raise rates too much. where is that level of breakage? i don't think it is anywhere near getting back to a positive yield. i think it could be with a 1% handle on the funds rate may be a 2% handle on the 10 year yield might be all we need to do to start seeing some real damage in financial markets. jonathan: is it ultimately too late if the destination -- too late? is the destination just a given

now? jim: i think the fed did wait too long and trying to address this issue. they are still buying $60 billion of bonds this month and $30 billion next month, even though chair powell said in his renomination testimony that that was not necessary. so you would hope at least at a minimum, they will exit that next week. they have waited so long, i don't think there is a magic policy they could do that would help quell the inflation concerns, help the financial markets, help the economy at the same time. they have got to try to pick one side or the other, and i think the fear in the financial markets more and more if they are going to pick the side of dealing with inflation, and probably because of the ratings we have seen in political polls and consumer confidence numbers, because everyone is concerned about inflation, they are ultimately going to respond to it, and the risk is that they are going to go too far. jonathan: could do your from you, jim bianco of bianco

research. bob michele saying 3% minimum on the fed funds. people and jim bianco -- people like jim bianco saying good luck, i don't think you can get past 2%. lisa: have they do and enough to actually curtail inflation just based on the moves we have seen in markets? i don't know that that is the case, and that is why people are probably starting to price in a 50 basis point hike for the first time going back to 2000. jonathan: it is interesting everyone is talking about march. i think next weekend will be pretty interesting for this federal reserve. a lot has changed in the last couple of weeks alone. tom: i strongly agree with that. what is so important here, what an advantage for the chairman to get out front of the debate and take charge of the dynamic. you do that now. you don't do that in march. jonathan: i have heard a few people suggest that they may be just wrapup qe, get it done, pull it forward a month.

lisa: we are talking so much about tightening, they are still extending the balance sheet. jonathan: our timing was off. things got a little more interesting. keir starmer was facing down some rowdy tory mps, and my understanding was he turned around and said, "i'm sure they were told to bring their own booze." things are getting quite messy. tom: can you tell the audience that the prime minister of the united kingdom might be out of a job soon? jonathan: i cannot tell you that, but i cannot tell you that he will not be. that is have delicate things are. tom: like "downton abbey." jonathan: i don't know about "downton abbey." [laughter] nasdaq futures bouncing back, up zero point 4%. this is bloomberg. ♪

laura: with the first word news, i'm laura wright. the international energy agency says the market looks tighter than previously thought. according to the iea report, the global supply glut is shrinking and demand is set to hit prepend month levels. inflation in the u.k. has unexpectedly surged to the highest since 1992. consumer prices rose 5.4% in december from a year ago. that to pressure on the bank of england -- that puts pressure on the bank of england to raise interest rates again when it meets next month. carriers from dubai, japan, south korea, and india are among those canceling or revising flight plans to the u.s.. they are concerned that the new

5g signals could interfere with equipment used to land in poor weather. u.s. secretary of state antony blinken says a diplomatic resolution to the standoff with ukraine is in the hands of russian president vladimir putin. blinken is in ukraine to meet with the country's president. later this week he will meet with his russian counterpart, sergei lavrov. russia has deployed more than 100,000 troops near its border with ukraine. 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 laura wright. this is bloomberg. ♪

>> too many industries have become too consolidated over time. we need to understand why, and think carefully about how our merger analysis tools can do better to prevent this problem from getting even worse. jonathan: jonathan kanter, the department of justice assistant attorney general for the antitrust division. from new york, with tom keene and lisa abramowicz, i'm jonathan ferro. your s&p advancing 0.25%. your nasdaq 100 up 0.3%. yields basically unchanged at 1.8790% on tens. crude, $86 $.65, up 1.43%. tom: it is a movable feast, and there is a trend there that is in her shall force which is -- that is inertial force which is

jaw-dropping. i looked at a gallon of gas up to a peak a number of months ago, and down we go, and we have barely hit the move in that price up, but you know what is coming. so does emily wilkins of bloomberg government. i want you to talk about the president tonight and how he will address a gallon of gas to centrists of his party. emily: to a certain extent, biden is going to have to point the stuff the white house has tried to do to address the issue, but he's also probably going to take a step back and elude to the larger situation. one of the things you are seeing with a lot of the criticism that president biden is under right now, one of the things left to do is really to put some of these issues in context as far as what the white house can do and what the white house is not going to be able to do. this press conference really needs to be a reset for biden on numerous fronts. the white house is being criticized, including by members

of the democratic party. tom: okta grover cleveland, this is a party that has always been fractious. does he lean left or center? emily: he needs both sides of the party to continue if he is going to get any of his agenda done. he needs the centrists in the progressive's. -- the centrists and the progressives. they do not have the votes to spare. they do not have a big margin. if you look at pulling numbers, americans have a lot more confidence right now in republicans than in democrats. that make it even more imperative that that party needs to stick together if they have any chance of being effective. lisa: what i am hearing from you is that he's going to give narrative and perspective. they have been trying to do this for several weeks, if not several months. it has been ineffective. what has stuck from their resetting of what inflation means and how the economy is growing? emily: i think that is part of

the reason why we are actually seeing biden do a press conference now. this is only the second formal press conference he has had on american soil since becoming president. that is not a lot, especially when you look at what his predecessors did. this is the chance for biden to step up to be the one at the podium, taking the questions. it is not going through p saki, going through other white house officials. it is coming from him. lisa: i go back to this piece in "the washington post" that one of the things he can do is to elect new fed officials to fill those empty seats. he can help shape a central bank that will determine monetary policy. do you think you will get any heat from that on a public level, or do you think that is kind of esoteric for ecom geeks and people who follow this -- for econ geeks and people who follow this stuff? emily: when you look at the polling for what americans usually pay attention to, the fed does not make the top of the list. i know it is very different for

our viewers here, and it is something we follow and we understand the importance of, but i think today, a lot of the questions biden is going to be getting and talking about is going to be more about coronavirus, more about the social policy plan that had health care and taxes as part of it. even in terms of foreign, what is he going to be doing with ukraine, with russia, with china, with the olympics coming up. i think those are going to be more of the focuses of this afternoon, although i think you are right to point out that with the fed, biden does have another tool for how he can address the current economy. tom: what are the questions going to be about? emily: they are going to be about a lot of things. part of it is definitely going to be coronavirus. why are they only now sending out tests, rapid tests who americans? why are they only now providing masks? it is going to be questions about what his legislative strategy is going to be. tom: i don't mean to interrupt,

but i think this is so important. is the job of the press today to grill the president to see how fit he is to answer questions? is that what we have gotten to, which were minds me of bush sr. or late reagan? emily: i am not sure of the press would view it as a test of biden's fitness. i think they would view it as a test of getting answers from the president himself, where the buck stops. in that sense, i would expect aggressive questions today because biden has not done a press conference in months, and a lot has happened that we really need to hear from him directly on. jonathan: why hasn't he done one for so long? emily: part of it is that biden has been prone to gaffes. last time he gave a press conference, he had to apologize, say he took the wrong tone. he has really tried to minimize those moments for him to make those potential mistakes. but at the same point, by doing so, he might not have been able to control the narrative as well

as he would have otherwise, and there are many aspects, foreign, domestic, where there are serious questions about how the administration is handling various issues. jonathan: emily wilkins, thank you. what did you say, 4:00 p.m.? lisa: 4:00 p.m. we will hear from him and his narrative on how to look at inflation, how to view the economy. they have tried this before. they have said the economy is growing, wages are increasing. and yet when people go to the gas pump, someone that is outside the purview of his control, as we have seen, how do they deal with that? jonathan: trying to change the way people feel about something is really difficult. we can talk about the data all day, talk about where employment is, but trying to change how people feel about the economy is tough. tom: i was sliding home yesterday after my four hour work day, and there was a shell gas station, small, new york

city, marked up. i get it. i looked at their fancy led screen and said, what does five dollars a gallon like? what does the nation do when we get to five dollars a gallon gas? jonathan: what was the number? tom: the fancy stuff was four dollars 62 four cents, maybe -- was $4.64, maybe. what if we get to five dollars in oklahoma city? jonathan: look at where crude is right now, just short of $87 on wti. talking about triple digit crude for q3. lisa: they have already done the oil reserve release. this is over. to me, the big question i have is how are they going to convince people that this is a good thing for them? it is not just that. go to the grocery store. go to paychex. -- to paychecks. jonathan: that was the question

that went to the prime minister. we are missing quite an event, apparently, taking place in permanent. tom: i am glad you are here to trance -- in parliament. tom: i am glad you are here to translate. jonathan: i am struggling to translate. [laughter] lisa: is that a translation?

♪ jonathan: live from new york city, on tv and radio, this is "bloomberg surveillance." alongside tom keene and lisa abramowicz, i'm jonathan ferro. any moment now, numbers from morgan stanley dropping across the bloomberg. 4q eps coming in at $2.01. the wealth management number that you wanted, tom, revenue $6.3 billion. the estimate, 6.2 $7 billion. equity sales and trading revenue , 2.86 billion dollars. the estimate, $2.49 billion. that is a nice upside surprise. a softer on fic, $1.23 billion against an estimate of $1.24 billion.

just some of the numbers pouring in from james gorman's shop. tom: we are diving into them. sonali is looking at them. we will give you the one ratio i have been following, which is return tangible common equity. they rounded up to a 20 percent. 20% is not 19%. jonathan: the stock just about turning positive, up 1.6%. lisa: i am further will be a lot of comparisons between the equity trading and sales at goldman sachs, and what happened at morgan stanley, where they eked out a beat. net interest income beat expectations, $2.09 billion versus the estimated $1.92 billion. how much are they going to try to emphasize that aspect as they expand in that area? jonathan: james gorman, the man at the top of this bank, "we now have $6.2 trillion in client assets. the investment bankers continued to gain share."

breaking down these numbers for us, bloomberg's sonali basak. sonali: you have costs that go up for investment bankers across wall street, but morgan stanley has consistently said over the past year that wealth managers are also going to need more money. it is a very competitive environment and they are growing that business. i am seeing pretax profit margin slightly below expectations. we are going to want to hear a little bit from james gorman about the details behind that. when it comes to morgan stanley, they have been operating at a higher efficiency ratio. they are coming in with an r.o.e. that meets expectations of wall street. james gorman has been rewarded for this massive and dozens he made last year. equity trading, everybody was watching that. that massive beat is notable, especially as lisa said, given the decline in goldman sachs and the rise at morgan stanley. morgan stanley is a longtime leader in equity trading. it matters even more when you think they have been long the number one prime broker on wall

street. with the archegos hiccup last year, they want to maintain that while it share. on top of that, they also have e*trade and a wealth minutes meant movement that -- wealth management unit that feeds into that. james gorman has spent years turning this around. now they are coming back, and for the last couple of years, james gorman has said more than $1 billion would be normal for fixed income trading. but $1.2 billion is light, $200 million light of expectations. lisa: help me understand the narrative driving the stock reaction. we are seeing stocks pop, up 3.5% right now, and we are seeing the investment bank revenue that came in just under expectations, even as he saw that big equities beat. this is more of an investment banking type of shop. why is it that certain numbers are more important than others? why is equity trading revenue more important than fic, more important than other estimates? sonali: for morgan stanley,

because they are traditionally the number one back when it comes to equity trading, that is what is really important. but i also want to point out morgan stanley, after goldman's numbers, also traded off significantly, the most since 2020. so you had a huge selloff yesterday. it is probably covering a low but of that today, especially because the numbers are not as bad as expected. tom: what does larry fink at blackrock think? here it is. wealth management adjusted for what they are doing now has a margin of 24.4%. that is steady income, minting money. jonathan: can we just say some thing about larry fink at blackrock? i think what he did with wages at the end of summer last year was just genius. get ahead of it. everyone below director level gets an 8% pay rise, and then move on. everybody else waited. i think larry fink at ahead of this story in a different way. tom: we are going to stop the show. i am going to get in trouble. jon, that was not woke.

that was listening to his employees. jonathan: are you using that word because of something that developed in the news yesterday? tom: they are trashing on mr. frank. lawrence -- mr. fink. laurence fink got out front because he was listening to somebody living in brooklyn or living in new jersey who said, you've got to be kidding me. jonathan: and at the time, it helped few -- it felt huge. it percent, while. now everybody chasing their tail trying to catch up. lisa: you made the point that now the pay rises don't feel like enough because you see the person next door getting something that might be incrementally bigger, which is why you are seeing jp morgan raise salaries for entry-level employees. jonathan: sonali, mohamed el-erian wrote on twitter this morning, and i think it is really interesting. is this reaction to what happened or anticipating what is about to happen with the labor market, with wages down the road? is this a one-off or something we will repeat? sonali: it is a little bit sticky in some regards.

bank of america raised their minimum wage even before we were really talking about this in a big way last year. at the same time, these 33% increases you are seeing, we were seeing 19% asked year, 23% in the quarter. a lot of this is bonuses, and there is leverage when it comes to keeping a clamp on those bonuses if this year is not like last. tom: thank you for joining us and giving perspective. i am sure it will wrap up in the coming days. right now, leslie falconio has to do with this, at ubs. lisa mentioned the resurrection, or maybe it was sonali, the resurrection in fixed income as well. right now i think it is price down, yield up. that is my analysis. where are you on duration? leslie: we have been bearish for quite some time. i think what we are seeing right now is constrained we thought we would see in the fourth quarter

of 2021. i think the key is this is being driven by a rising real rates. i think it is important to renumber that. we do think interest rates are going to rise, but now that we get towards that 2% and given the bearish indicators, whether it is qt at the fed, tapering, new risk into the marketplace as we enter a new year, you were going to pause, and we don't think it is necessarily a bag thing -- a bad thing. lisa: this is a concern, that perhaps the fed is just jawboning, trying to get people to move, and then they won't actually have to make the moves that would potentially break the market should to get to a certain point, according to jim bianco. where you stand on this point? leslie: the market is pricing in four rate hikes, and we are probably about three to four as well. we think they will continue

woodley --they will continually heighten conditions. the market going forward is only pricing in a few rate hikes in 2023. we think there will probably be three to four rate hikes this year, but going forward, it is going to be a little bit longer than market or anticipating. i think that the risk qt is they do it quicker and faster, or higher and faster. anything about what the primary markets were actually showing in terms of what they expected for qt, most of them did not think it would happen until 2023, so i think the market is reacting quite well. i do think the market is fairly prepared for one. jonathan: leslie, thank you, as

always. qt, how much will we see that balance get wound down? we will catch up with matt luz etti of deutsche bank a little later on. he's put big numbers on it, maybe $1 trillion worth of reduction next year. lisa: that counts for more than one rate hike. that is what people are saying, that basically can't say three rate hikes and then qt and count that is four rate hikes or five rate hikes. i think this ambiguity may be leads to a reason why it looks like the market is pricing in more than perhaps the fed will do through the rate hike mechanism. tom: let me throw out a siri here for both of you. lisa, you are way better on this than i. i noticed james gorman at morgan stanley, and he really does not have the destruction of consumer banking. the others have consumer banking , like jp morgan, wells fargo with their own treatment as

well, and goldman sachs doing what they are doing. i just don't see that at morgan stanley. they are just focused on what they are doing. jonathan: you characterize it as a distraction. that implies using it as a problem. tom: i am not sure. i just and the path gorman has taken -- i just think the path gorman has taken seems way different than some of the others. lisa: they are more focused. you could say they have a limitation of his strategy that has been executed well. i think that might be a more fair characterization. right now, goldman sachs really trying to expand to consumer banking. a lot of the other firms are as well. frankly, at a time when lending is really going to be the key driver, at least according to a lot of projections, this seems like a good spot for people to begin if they can do it well, if they can get enough critical mass, if they can do the credit quality well. i think that is the distinction we are seeing in these numbers and the reaction to them. jonathan: that is a wrap for earnings on wall street. we will pull down those numbers.

balance sheet reduction, $500 billion this year, $1 trillion more in 2023. the total drawdown of the balance sheet through the end of 2023 a month to somewhere between 2.5% and 3.5% interest rate hikes. we will catch up at 8:30 eastern time, so in about 50 minutes or so. very close to a 10% correction on the nasdaq 100, then bouncing back 31 on the nasdaq 100 futures, higher by 0.2%. on the s&p, up 0.2%. the bond market, yields just a little bit higher, with the emphasis on a little bit. yields, 1.877 2%. a whole lot higher on the year so far with an emphasis on a whole lot higher. this year up 40 basis points year to date, not even three weeks into 2022. unreal stuff. from new york city, this is bloomberg. ♪

laura: with the first word news, i'm laura wright. president biden will defend his record as he approaches the one-year anniversary of his taking office. he holds a news conference at the white house, ending the first year with audible setbacks and falling approval ratings. those ratings are tied in part to the highest inflation in almost 40 years. the white house is set to release four hundred million nonsurgical n95 masks from the strategic national stockpile. i americans will be able to pick them up from tens of thousands of sites beginning late next week. the cdc updated its guidance on masks last week get it suggested americans may choose to wear n95 masks or kn95 masks. a survey according to the american chamber of commerce in hong kong found 41% of those responding say they are likely to leave. president biden's antitrust

regime is facing its first big test of the year. microsoft's $69 billion takeover of activision blizzard brings together two major gaming platforms and a deal that directly affects consumers. it could also raise objections from some of their biggest rivals. the agreement is likely to get an extensive review from regulators. ford expects to gain a $.2 billion in the fourth quarter on its investment in really automotive's. -- gain h $.2 billion in the fourth quarter of its investment rivian automotive -- gain $8.2 billion in the fourth quarter from its investment in rivian automotive. 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 laura wright. this is bloomberg. ♪

pm johnson: this government made

the big call to pursue our own -- rather than going back into the eu scheme. jonathan: very interesting comments coming from the british prime minister this morning, not about his leadership, but about ending this pandemic. the government is no longer asking people to work from home. the government is no longer mandating the wearing of face masks. we still advise the use of face masks in some places. the additional headlines anticipated after some of the reporting over the weekend, we aim to remove isolation requirements after march 24. people testing positive still need to isolate. they must still isolate. but we aim to remove the isolation requirement after march 24. tom keene, that sounds look a line in the sand to me. i don't know about you. tom: what are they waiting for on much 24th -- on march 24? that is what i find fascinating. the moment is moving at light

speed compared to the speed politicians are moving at. jonathan: hope the numbers improve, but what is interesting about this is assuming that after this, that is it. we move on. that seems to be the communication coming from the very top of the bridge government this morning. tom: and what is after omicron i think is the zeitgeist this morning. what i take away is that when i listen to scientists, and the scientists say omicron is rolling over, and they said that two weeks ago. jonathan: so which scientists do you listen to? dr. fauci said you can't rule out another variant. another variant that could be more disruptive to the way right now. at the same time, the pfizer ceo came out around the same time over the weekend and spoke to a french newspaper and said by spring, we can get back to normal. people have different interpretations of the same data, tom. tom: am i right to say that the united kingdom is ahead of america on this? jonathan: yes, but also a bad --

also ahead of america in some ways with this particular wave as well. there was a case study for what would happen in america with an appropriate lag time of may be several weeks. i don't know. the approach from politicians is pretty clear. in the u.k. and the u.s., they want to move on from this, and the u.k. has shown some leadership there. tom: it is fascinating to me. i don't know where this is going, but it is in real time. i don't know how the prime mr. waits for a given date in march that seems forever away. kriti gupta joins us with a chart of the day. kriti: we've got to talk about those banks, talk about what they are responding to. the pretty traditional play when you start to see nominal rates climb, banks are going to be your go to. pretty natural to see that is going to come into their bottom line, as you have higher rates. you can charge more on that lending growth. but if you look at the correlation, the ten-day correlation between the bloomberg world bank's index, which takes into account banks

around the world, and the 10-year treasury yield, that correlation on a 10 day basis is turning negative, so we have statistics on our side to point out that this traditional play where you see yields higher, banks higher, is getting flipped on its head. those rate hike bets not playing into the financial sector the way we would think it would. tom: we've got to leave it there. thank you so much. right now, alison williams gives us the first summary. completely unfair. what is your initial summary of what we have seen from the banks? alison: i think what we have seen is the number one take away, the higher cost to compete. that has been the big story of this earnings season. we got the two biggest surprises from j.p. morgan engelman sachs. bank of america -- j.p. morgan and goldman sachs. bank of america today was like a win, but how are they planning to keep competitive?

perhaps the same question for morgan stanley. i have not seen their strategic update yet. we were do get that today, with their costs coming in and revenue coming in pretty well. tom: what is the technology winner? who is the technology winner, i should say? i assume it is jp morgan. alison: i would say jp morgan and goldman sachs. jp morgan is more of the broad winner. if we look at the market share gains of jp morgan over the last five or 10 years, trading has been a big area. cash equities was the one area they did not have a leader but ship -- a leadership position, but they have fixed that. on the repo side, the deposit share they have gained. in part, it is digital, making them more efficient, but increasingly, these banks are on the offense in terms of customer

facing technology. we have jp morgan spending $15 billion. they said their costs are going to be 8% to 9% higher this year, and trickling into next year, and that is due to technology investment. goldman sachs also saying technology talents. i think we have to dig -- have to take a step back and look at what that means for the industry. lisa: we are all talking about comp, but the story still is that net interest income is rising, particularly at some of these big lending companies also seeing their loan books expand. have we accurately priced in the feature of higher interest rates at a time when lending is taking off with consumers actually borrowing again? alison: i think one of the reasons why bank of america has been the best performer, bank of

america and goldman were really with the leaders of the group. it was because of the strong trading in the fees we got this quarter. anka of america is more about the rate expectations to come. so i think at least some of that is priced in. the stocks are pricing in the rate outlook that is priced into that market, so the variable is loan growth, and for bank investors, it is great that banks are interest-rate sensitive, but they want to see longer because that is really building the business. so we are seeing improvements for that bank of america. you bring up the interesting point, which is we are all talking about comp. that is the story looking backwards. there is momentum going forward, but it is really going to be the net interest income that is going to be driving the revenue at these banks. jonathan: alison williams of bloomberg intelligence, thank

you. just got citi and standard chartered publishing on the inflation outlook. the four hikes that are now price for 2022, "our forecast for two hikes is still our forecast. we see a peak in late q1 is reducing the urgency of hikes, but until we see that peak, the doves are on the back foot." just gives you an idea of the range of things. two hikes for this year. the belief for them is that q1 is going to be where this inflation story peaks. tom: some of the names we are not mentioning, david rosenberg and david blanchflower at dartmouth, publishing women's ago, bloomberg intelligence, ira jersey and his team. their land would is forceful. they see tip yields, the 10-year gilts skyrocket. jonathan: is ira jersey at five hikes for this year now? i think i saw that. i think he might be. we got to check in with iran find out.

coming up, andrew sheets of morgan stanley. tom: theresa may is speaking in parliament. is that a big deal? jonathan: i think it is nice to hear from the former prime minister. i am getting the 10 second count, and you know that. from new york city, this is bloomberg. ♪

>> something has got to give this year, and it might be margins. >> i think we are heading for the titus labor market since the 1950's. >> we expect the measure to rise. that does not mean the fed will go away. >> we think the fed will have more difficult he raising rates rapidly than the market believes. >> we think we are moving towards the next new normal. with ink it is a positive move -- we think it is a positive move. >> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. tom: good morning, everyone. on radio, on television, we dive into the middle o