time? >>i think we will the realization the economy is it not as good as we thought. >> some industries outperforming. >> this is "bloomberg surveillance." jonathan from new york city for our audience worldwide, good morning, good morning. this is "bloomberg surveillance." alongside tom keene and lisa abramowitz. your equity markets unchanged. the s&p still negative. tom: geopolitics front and center. strong swiss franc. there are some key points of a news with strength and it is one of the issues in continental europe. the news buried is that the u.s.

authorizes the delivery of stinger antiaircraft missiles ukraine. this is very much a developing story for all of bloomberg surveillance. jonathan: we had to cleanup act following the news conference. the quote, it is one thing if it is a minor incursion and we have to find the path of what to do and what not to do. is the toothpaste out of the tube? tom: you have been talking about the nord stream 2 and things that make my eyes lays over, but this is the phrase of a fully coordinated plan, where is the fully coordinated plan among western allies and nato nations. jonathan: that is the politics. in the premarket, only one name, netflix, down, down, down it goes 20%. maria: down 20% -- lisa: down

20% after they announce they expect new users down. the key is how much we bring forward demand and see a lagging rebound? we are not seeing a go back to pre-pandemic levels in terms of those gaining traction. how much is the precursor on what to expect. jonathan: down 20% on the nasdaq . tom: i listened to a conference call at netflix and the ceo saying we can talk all night but that's not getting us anywhere. jonathan: i know that is a tribute to you. tom: meatloaf dead at 74. 70 who had a lot of courage. he was rejected by -- somebody who had a lot of courage. he was rejected by everyone. i hate when the media bundles

things together. let's look at microsoft out of the piggy bank versus netflix. cash flow, 2019 to pre-pandemic out to now. netflix, -$3.1 billion. microsoft, look at the difference in size. microsoft is a giant enormous, 38 billion large up to 65 billion. jonathan: i don't think you can compare those anymore. there was pushback even then. that is justified this morning. i don't think you will get microsoft numbers the following day. tom: i know we need to get to greg boutle. i told you everything that i can. there is nothing left. jonathan: futures negative three on the s&p. down 56 on the nasdaq 100.

down put 4%. i will bring you stats on the nasdaq 100 a little bit from positive 1% to -1%. it was said the first time in over 20 years the nand at -- nasdaq was up 1% and finished down 1% on back-to-back days. lisa: this is what is getting a lot of people concerned. does it pretend more weakness ahead? we expect antony blinken to meet with sergei lavrov in geneva. the key issue is what can the u.s. do to either put sanctions on russia or even penalize them when her is this oil tied to europe, the nord stream 2, the issue of the reliance of the european area and crude rising to the highest levels going back to 2014, how much does that price hinge on the talks?

the leading index for the month of december, less interested in what it says but the trend we see in the economic surprises. we have sheen it -- seen it shift down. over the past few weeks, increasingly they have come in disappointing. does this hint to the omicron bump in the road. at 11:30 a.m. we hear from janet yellen speaking at the virtual devil's meeting. yesterday she was talking about her expectations for inflation remaining above 2%. if we are successful in controlling the pandemic she said i expect inflation to diminish and hopefully revert to normal levels around 2%. how much does this become the mainstream? it seems this is increasingly consensus, even as a number of

investors pushback and say they are wrong and we are in a new inflationary environment. jonathan: cope is the key word in every -- hope is the key word and everything janet yellen said. bank of america getting my attention, january 2020, first covid-19 case, two years later, 6% of investors see covid as the biggest risk in the 12 months. the end of the pandemic equals the end of excess returns equals the end of excess asset return to the end of the next stimulus. bank of america just saying it is not ending. greg, we are trying to figure out the direction you run away from and when you buy paired what is the difference? -- by.

buy. what is the difference? greg: the rate of the pace of change in real yields. if they carry on the way they are, it is problematic. tom: could that shift quicker? it seems like we are compressing performance of zeitgeist into three weeks. i get the urine call in inflation. equities do better in august, october. could we be missing the equities do better in march and april? greg: i would point to the previous fed hiking cycle. we are all concerned about what this lift off from the fed is going to mean. look what happened in previous cycles. in 12 of the last 14 cycles, the market finished higher 12 months after the first rate hike.

typically, equities go up because earnings pick up the slack. however, in four out of four of the last hiking cycles, we have seen equities lower immediately after the first rate hike. step higher in real yields is not that a typical fed lift off in the first cycle. going into march, reason to be concerned about turbulence. lisa: heading out of bank earnings this week, how concerned are you about margin compression and wage increases being beyond what many people expected? greg: if we extrapolate the banks to the rest of the reporting season, it would challenge my more bullish thesis for the year. this is something we did flag going into this earnings season. when you look ahead to the consensus earnings for 2022, the

u.s. had the worst forecast earnings. the financials had an exceptional year last year. there were unrepeatable gains in terms of investment banking or market revenues. the bank is a potentially bad barrier for the rest of the year. people will be focused on large cap tech but we are going to keep an eye on the industrial cyclicals with some highest growth earnings. jonathan: thank you, sir. really interesting piece on the financials. if you are hiring this year and boosting compensation aggressively, your stock is lower. if you are firing and reducing headcount, your stock is higher. so the banks is a sector, within the banks, it tells you something very interesting when you look at the hiring and the headcount going up in the firing

and headcount going down. lisa: the footprint of those profiles are very different because the ones that are firing tend to be the big more traditional lending banks. i'm thinking of the wells fargo's of the world or bank of america trying to streamline some services, whereas the investment bankers are the ones beefing up their teams in order to capture some of the market activity. it points to this bifurcated nature and the banking world, much like the tech world. jonathan: and the show in many ways. j.p. morgan down 7%, wells fargo up almost 15% year to date so far. something to think about. you keep talking about the most important inflation print of the year, you keep putting to march but may 11 is the inflation report. is going to be very interesting. we see the peak in inflation and then a different way to kicking

in 12 months ago. if it phase materially, that could set the tone for rate hikes. tom: i thought there was a blistering note from deutsche bank which really can humble those looking for four to six increases. he said this inflation is contractionary. jonathan: he also said if you wanted to know where it neutral is, the equities will settle back. but the financial conditions tell you. tom: we are supposed to be in davos. jonathan: i am think we are not. tom: i talked to barry and he said no virtual piano bar. you should hear barry play meatloaf. jonathan: these are high-class problems. if it happens this summer, i will be lobbying hard for it to say in the south. i don't want in the winter.

coming up on the bond market, looking forward to subadra rajappa.' leigh-ann: i'm leigh-ann gerrans with bloomberg's "first word news." secretary of state antony blinken is meeting with his counter problem -- sergei lavrov. there are roughly 100,000 russian troops near the border of ukraine. also the prospect that netflix is in a phase of slower growth, down as much as 20%. netflix of the slowdown will continue for another quarter. in u.k., down to pre-pandemic

levels. the superstar known as meatloaf has died. his album had hit such as paradise by the dashboard lights and two out of three ain't bad. it became one of the best-selling albums in history with more than 14 million copies sold. meatloaf was 74 years old. global news 24 hours a day, online and at quicktake on bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. i'm leigh-ann gerrans. this is bloomberg. ♪

>> adding any assembled russian units across the border is an invasion. it will be met with severe and coordinated response. i have discussed in detail with allies as well as layout very clearly. let there be no doubt at all that if put in makes this choice, russia pay i have a price. jonathan: the president of the united states straightening things out. from new york city, good morning. futures down, .3%. on the nasdaq, down .7%. yields are lower. we can discuss that lower, down a basis point.

the stock of the morning in the premarket, netflix, down by almost 20%. at $200 billion name should not move this much. -- a $200 billion name should not move this much. there should be better transparency. it should come in at something like to. it is a $200 billion name for goodness sake. i have to -- tom: i have to be careful because i will get myself in the timeout chair. this is just arrogance. the tech people never want to admit, there is never any guidance. jonathan: it is bizarre. you have to go back to 2020 to see and move like this -- 2012 to see a move like this. down just north of 400. tom: president biden resetting

for year two. annmarie hordern is there and we will talk about the reset of the president. joining us from geneva from st. peter cathedral looking across at the beautiful city. maria tadeo joins us. tough life, maria. what has been the surprise for you? maria: to me, the russians have a very different perception of what is happening, in europe, we could potentially go to war in ukraine. the russians see it very differently. you pick up a lot of details and anecdotes and russian officials connected to the government have told me we don't see a war happening. this is the west creating drama. the perception is very different to the tone we hear from both

the u.s. and european countries. tom: is it perception different than clinton-burbage of. -- clinton-gorbachev. how is putin-biden effort? maria: when it comes to ukraine, there are many ways to look at it. president ayden said we are gonna get sanctions that will affect the russian economy and country. latimer putin is thinking they are not going to do it in the europeans are not going to do anything, so this is a moment he could make a benefit on. the second is he is looking at the energy situation. the united states is a different story. in europe, these are the final years he can milk the europeans on the gas. lisa: what is a heavy price

russia could face should they invade ukraine per president biden? maria: this would be a continuation of harsher sanctions. there are a number of issues being discussed with western partners and the united states, export controls. some of that is key information in the technology information space, sanctions on individuals, banks, potentially cutting off russia from trades and a potential nuclear option would be cutting them off from the payment system. that would create havoc for russian businesses and western businesses. annmarie: what could the u.s. do to make more available to allies and talked about other nations and getting

reserves unleashed. do you know any details on that front? heather been discussions you are aware of on that level? -- have there been any discussions you are aware of on that level. annmarie: there was an avalanche of sanctions and cuts europe off not so much from oil but natural gas. europe gets 40% of their natural gas from russia. you have the north sea been depleted. they get some from algeria, norway. potentially the united states could send more liquefied natural gas. do you remember when the u.s. energy department came up and said we are going to be having freedom yes, -- freedom gas. this is getting much more expensive for the europeans. russia averse quick and easy

gas. tom: what is so important to me is the allies, the future of nato as well. the zeitgeist in washington is wrapped around the phrase "fully coordinated." how fully coordinated is president biden with the new leadership of germany and micron running -- macron running for his new office? lisa: -- maria: it is very telling and we understand that -- was supposed go to the united states. how united they are will have to see and when the becoming clear is that europe is a big power when it comes to commercial interest, but when it comes to security, it is the baby, early days. there are a lot of teaming

problems. jonathan: to you both, thank you very much. an importing -- important meeting later. tom: but it is folding into confidence out there and we see it in the tea leaves and litmus paper of the financial markets. a strong swiss franc showing tension in the markets to the midafternoon in europe. jonathan: i'm going to avoid coming up with neat narratives to back this. i was thinking back to 2014 and crimea. in november of 2014, the saudi's started a war over the market share. it went down to the 40's. the swiss national bank had to deal with the falling ruble. things can play out in really

unpredictable ways when things like this happen. lisa: that is where my mind went, clients thinking about removing funds from russia to get ahead of potential sanctions. jonathan: sarah house will be joining us. futures

jonathan: the end of the pandemic, the end of excess earnings. we are down .8% and then 10% from the previous highs. speaking of ugly and the end of excess returns, these two names. it has been brutal for peloton, down more than 20% in premarket. for netflix, a $200 billion plus company, down more than 20% in the premarket. looking at a 6 million plus projection, the forward look from the company about one third of that. not very good. this has nothing to do with the

bond market because yesterday yields were lower six basis points and this morning to basis points -- this morning does cobe basis points. -- two basis points. tom: i am watching the vanilla spread. it comes in 78 basis points and that is a flatter yield curve. maria: -- lisa: that i things that i look at, i will defend them to my death. can we move on? jonathan: 30 is at 2.1%. tom: you are done, ok, thank you

. there is a lot going on as we read into the weekend. there is a lot going on. stay with us through the morning. right now, with an extremely sharp note, putting the timeline i want to go to march. let's take it from jc's are, beware of the rate hikes. are we going to see in the work of economists the beginning of an adjustment of what will occur in march? >> i think we have already seen it move that way. a lot of economists and what they called will be the theme and what they are doing to signal not just the timing but increasingly we will see more attention in terms of what the pace looks like. is it going to be roughly the 25

basis points per quarter like we saw last cycle or could we see something more aggressive, whether that is potentially a 50 basis point move out of the gate. tom: why can't they come out and say we are in a pandemic, we have massive uncertainty, including the diplomatic events in geneva, we are going to go 25 and then sit? i can't they say that? sarah: when you look at the overall state of the economy, even as we are in a pandemic, we are seeing an extraordinary strong picture. markets are solid. markets low for percent. when we look at where policy is, it is still accommodative and it is hard to fit when you have 7% numbers and it's hard for the fed to stand idly by the optics

do not look good. maria: -- lisa: it is actually very nuanced. george saravelos talked about it saying that the inflation we are seeing could be contractionary and if the fed doesn't act, the economy will slow much more than people are expecting. how much are you seeing people not spent because they are concerned about how high prices have gone? sarah: i think we have certainly seen that in some of the buy-in plans for big ticket purchases. if you look at eight michigan survey, you see the plan for homes and durables cratered. when you dig into the reasons, it is not so much households being worried about finances but it is the share price. we are seeing this inflation canonize some of those and it is one of the factors leading us to

expect more trend like pace of consumer spending which will offer relief on the inflation picture but it will be more towards the back half of the year and then looking at an environment of inflation well above where the fed wants it to be. the nature of this -- lisa: the nature of this is becoming more perilous. workers enjoyed the biggest wage gains and now seeing them fall behind on a percentage basis relative the highest earners. you are seeing bank employees with massive gains in salaries. how much does this change the narrative in a significant way and pushed the fed to move faster, because right now we are back in a scenario where top brackets are benefiting the most. sarah: this is an important element. we focused a lot on the labor market being broader and more inclusive over the last cycle. when we look at the current

environment and state of inflation, grocery store prices, energy, housing costs, when you factor in utilities, also up by the most we have seen since the early 1990's. this disproportionately affects the lower end house comes -- household. there is something to be said for the fed tackling this inflation to make sure it doesn't become entrenched and have to tighten further down the road. it has a disproportionate effect on the lower income households for they don't have the savings to dip into the same as the higher income households. tom: let's go back to john silvia who developed wells fargo ntu sarah house -- and to you, sarah house. what does this due to to the inflation adjusted paycheck? sarah: in terms of hourly wages, we have seen them negative over

the past year. we will see some improvement in that dynamic as the year moves forward. we expect stronger it wage growth as we see the labor market continuing to tighten and businesses come around to the fact that if they want to attract and retain workers, they have to pay up. that was a lesson hard to learn. tom: go away from hourly wages. some it is making 140 and the other is making 120 or 90 or 180, whatever, on the old all in they are doing attacks of 150 pair that is not an average hourly wage but getting clobbered by inflation. are they going to be able to keep up the upper-middle-class household that everyone aspires to? are they going to keep up in the next 24 months? i don't see it. sarah: it is going to be looking better when you talk about the stronger wages, not just in

leisure and hospitality where we see higher-paying brackets. the fact that we are expecting inflation to recede over the course of the year. the balance is going to get better. we talk about the overall household income, we have to consider that we are adding jobs and that will help offset the inflationary pressures that the households are seeing as we see more people step back into the labor market and go back to two income households. lisa: the fed is increasingly moving to a data dependency as they keep saying and a lot of people in the market seem to believe, the question is which data? what is the most important data you are watching the weeks and months to come? sarah: it boils down to inflation. we are under the assumption that

with the difficulties in staffing and bringing new workers, it comes down to how quickly or whether at all we see the inflation pressures begin to recede. we expect inflation on year-over-year to top out in the first quarter, but on a monthly we are seeing strong gains. it is a matter of how much the monthly gains come down. i think that will still keep the pressure very much on the fed to signal that they are closely tracking inflation and trying to rein that in you for it comes -- becomes too entrenched. jonathan: sarah, thank you. maybe peaking at the end of q1. i was catching up with larry mcdonald, reminding me of the sequencing of the federal reserve and the timeline. remember the taper back in 2013 and the hikes didn't start until

2015. qt didn't start until 2017. this time around, they are going to do it all in the space of several years, a few months. tom: that is the plan. who says that is actually going to be what happens. jonathan: can the executed? tom: or will they be overcome by events? jonathan: the interest rate hike everyone is expecting, is in march. equities already down 10% on the nasdaq. lisa: this is such a different time because of inflation. you have some people saying, should the fed not only not back away from a correction but aim for one because that is the transmission mechanism of the policy. if you actually are dealing with inflation, you are not trying to normalize for more emanation, it changes the game. jonathan: that's why it is

impossible to say with any confidence or conviction that we have discounted all of this in this market because so much of it is unpredictable. lisa: i would agree with that. what are we discounting? what policy regression and reaction in markets? there are so many nuances when data is moving quickly. jonathan: heidi discount $1.5 billion of balance reduction into next year -- how do you discount one point $5 billion of balance reduction into next year? tom: it is a cliche that is true, this is original territory. are we quoting gold today? i would like to. you will not find your gold on a sandy beach. jonathan: i thought you go with the big tech story and say the screaming and howling down and the valley tonight. lisa: oh boy, really? jonathan: come on. futures down on the nasdaq.

from new york, this is bloomberg. ♪ leigh-ann: i'm leigh-ann gerrans with bloomberg's "first word news." bitcoin fell to the lowest level in five points. it dropped below $14,000 and a high of only $69,000 back in november. coins have become the symbol of their retreat. china urging banks to increase lending after a slow start to the year. the pboc has given guidance for regional banks and urging them to extend more credit to companies and households with lending in the first two weeks of the year. a magnet for -- falling. they can only recoup bankers and traders live there.

frustration with the policies. the american chamber of congress said 40% -- what is expected to be the biggest manufacturing site, it will be near columbus ohio. the company will research, develop, and manufacture chips. global news 24 hours a day, online and at quicktake on bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. i'm leigh-ann gerrans. this is bloomberg. ♪

>> we do not have high enough rates of him is asian.

the loss on the jobs mandate in the workplace safety employers for over 100 employees is a real loss because it will prolong. that is still our biggest vulnerability. jonathan: with equity features this morning down 20 on the s&p, -.4% on the nasdaq 100, .8%. unlike in previous weeks were risk assets have been shaped the bond market, the bond market seems to be shaped by risk assets. we are hearing from reports that the talks between secretary blinken and his russian counterpart sergei lavrov has wrapped up. we are told someone about a.m. eastern time we will -- about 7:00 a.m. eastern time will have a separate conference with

sergei lavrov. tom: distance from the two hotels is the distance that maria tadeo made that the goal is not have an agreement, it is just to hear each other out. jonathan: i would say the ideal situation would be a joint news conference, not a sovereign 130 minutes apart. nothing about this is ideal, is it? tom: we will bring that to you worldwide and looking at headlines. for at least everyone in america and a tumultuous united kingdom, the conversation is we all go to omicron this weekend. i have to cut to the headline news and i see a 714 day average

-- seven to 14 day average that is 2000 deaths per what does the signal to you? >> this is a major shift on how the variants have been causing disease. we have seen omicron be less severe but because it is so transmissible, it is increasing case numbers and therefore slightly lower severity rates is being trumped by the fact that case numbers are expanding so high. we are seeing case numbers drop but it is important to remember that hospitalizations and deaths often time lag case numbers by two weeks because it takes longer to develop severe disease. tom: this from the post and we want to get your perspective, unvaccinated, 65 or older are 49 times more likely to be hospitalized. how many of those 2000 deaths were unvaccinated people versus vaccinated? >> the vast majority, and it

ranges anywhere from 75% to 90% based on the numbers i am seeing. unvaccinated people are still driving that severe disease. tom: do we need to do what austria does? overnight they said get vaccinated. >> this is the ongoing issue and it is also going to come into play when we start to see case numbers continue to drop and where we are going to plateau. are we going to plateau at a level that is low, pre-delta, or hide who are unvaccinated. on top of that, it has shown that the boosters are helping prevent infection. we are not just talking about vaccinated but people have to be vaccinated and boosted to really get the maximum protection against omicron. lisa: over in london, some big banks saying, time to get back into the office and we have to

live with this. we see that from goldman sachs and barclays. do you think this is an appropriate policy? do think people should get back to the office and using public transportation and operating like this is the norm? >> it is not about past the people close to the bottom of the peak. that is the critical thing, because historically in other pandemics, a lot of information showing that if you bring people back to early you suffer risk of having a second surge of cases or plateauing at a higher level than you would if you had waited a little longer. signs are looking good but we still have to realize we are at high numbers of cases in most places and we still need to hold on and monitor and minimize that for at least another week or two. lisa: what are you looking for to ring the all clear and get back to normalcy? >> it is the slope of the line

that is showing us the case numbers and when that slope turns to a plateau. if it turns to a plateau at a high level, then we will still continue to see absence from work and impacts on the economy that the illnesses are causing right now. it is really about where this autumn's out in terms -- where this bottoms out in terms of normal school and work life. jonathan: andy, thank you. deutsche bank looking to bring big efforts this week. lisa: you have seen the banks saying we could move to a hybrid but we are past the peak and we have to start getting back to normal. they are going to be wearing face masks and have certain mandates and have testing requirements. but when do we say we are back to the new normal? when queen make that determination when you have a lot of cases but not followed by

quite as many deaths. jonathan: i think some people have already decided. the u.k. is already there. tom: there is some confusion, deutsche bank said they are going back to work in london and i believe lisa said with masks. to the prime minister of the united kingdom say 48 hours ago forget about masks? jonathan: he did end the mask mandate but said in some places you would have to wear them and ultimately it is a corporate -- private corporation that estimate the decide -- decision for their employees. tom: i guess so. jonathan: you have noticed that a lot of corporations have gone that extra step further in terms of testing and vaccine requirements before the government made the big push for a vaccine mandate. tom: clearly in the united states, that is the tradition. we mentioned austria and the asian countries where there is far more of a government

statement. in the history of medicine back over 200 years is for private response. jonathan: there has been a meeting this morning with secretary blinken and his russian counterpart, survey lavrov. -- sergei lavrov. he is speaking right now and calling it an interim meeting here we will have separate news conferences. we will hear from secretary blinken between now and the next 35 minutes. tom: there is a triangulated moscow, berlin, and kiev. jonathan: the most important headline, survey lavrov saying -- sergei lavrov saying that secretary blinken said he was happy with the meeting. it is a low bar at the moment. lisa: it is also really telling went summit he says this before their compatriots speaks at a different hotel location separately half-hour later. jonathan: it is the problem i

have with separate news conferences. tom: the three best met in new jersey yesterday and i said i was satisfied with the meeting. jonathan: are you saying you weren't satisfied with the meeting? futures down .7% on the nasdaq 100. from new york, this is bloomberg. ♪

♪ >> for they break something when they raise rates too much. >> the question is what is different this time. >> i think we will get the realization that the economy isn't quite as good as we thought. >> this is a lopsided market. >> we think real yields start to rise this year. >> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. jonathan: waiting for secretary blinken. from new york city, for our audience worldwide, good morning. this is "bloomberg surveillance ," live on tv and radio. nasdaq futures down 96, down 0.6%. the foreign minister of russia right now, sergei lavrov, continue to speak in his news conference. tom: you really see it in swiss franc and euro swissie of the tension within europe. this is what bloomberg news does best.