>> it's all about financial conditions and how much we need to see tighten. >> companies have never been this profitable. >> i think there's a lot of opportunity in some of the tech stocks. >> we think this says the year to be selective. >> markets now to correct to some level of normalcy, and that's what we're seeing. >> this is "bloomberg surveillance" with tom keene, jonathan ferro and lisa abramowicz. tom: good morning, everybody, on radio, on television, it's all about google. the alphabet from a to z, it is up. january 26, the v.i.x., 31.96. that was my entry point.

i missed it. jonathan: what a change. we've taken a big bite out of the losses over the last three days. three days of gains, tom, up more than 7% on the nasdaq 100, and we're set to add weight to it. futures up another 1.7%. tom: it's the quality of the gains, and what i'm seeing percolating away from tech is, oh, yeah, it's everybody else as well, and it's about a resilient margin level versus the gloom margins will disappear. jonathan: and how much can you see ad growth in the google business, up more than 3% on the quarter, is that a confidence play for you, just a nice read on the broader economy, despite what we've gone through in the last couple of months? tom: i'm going to partition and say the halves of technology, whether it's direct technology and not, and we got meta, facebook this afternoon, and amazon, but even more important, i'm looking for the next u.p.s. jonathan: we saw a big one from them after the close. then it's on to facebook,

amazon. you put them together, great, solid, encouraging. you look at the bond market, bit of stability. i think that's how well it is. just settle down just south of 120. tom: we'll get to the data and talk about the markets. i want to talk about the other america out there, and with this effervescence about technology, it's absolutely stunning how there are two different me. lisa: especially how the shift has been accelerated by the pandemic. we're going to get the january labor report on friday. how much have we seen a shift away from service sectors, from people-facing industries, to people where people can work from home and be in the officer not and have more flexibility. i mean, the shift has been dramatic, and that really has been feeding into some of the wage increases we've seen for delivery, for hospitals, for educators. tom: let's go to douglas on yesterday, and he said watch credit, watch credit, watch credit. you are the arch credit watcher. what do you see?

>> honestly, it's all good. you saw the selloff in january, but it was tame to what we saw in 2013. you're seeing companies come to market. a.m.c. is selling junk bonds today to refinance some of their expensive debt from the pandemic. a.m.c., shares have popped, and people feel like, well, we're all going back to the movies. jonathan: can we frame that line, tom? it's all good? lisa: complete. jonathan: it's all good. lisa: honestly, it's a sentiment shift from one day to another is just whiplash. you look at the yield curve, it's still slight, and nobody cares, because earnings are good. jonathan: i like how you said it's all good, just snark at the end there. question her sincerity. tom: it's like we're in the kitchen peeling artichokes on this show. you don't see it on radio, but the way the chill from this is just extraordinary. let's warm everybody up with a

data check, jon. i'm going to go to what's not mask, which is oil, up $1.19. a bit of a pop off the opec announcement. jonathan: sitting there in the chair in the building building, everything is fine. futures up .9 on the s&p. on the nasdaq, up by 1.6. 177.51, look at the eurozone, inflation, it still has a five handle. we expected it to come right the way in on a headline number. didn't happen. euro dollar up half of 1% on that. we're positive, stronger on the euro, 113.26. tom: i'm going to mention ruble here. dollar ruble is what i look at, make it 76. stronger ruble here this morning. let's get to it, the chief investment strategist, what's the view forward? do you adjust off of the tumult of january, what we've seen? how do you adapt at nuveen? >> everything has happened so quickly that we rarely had time

to revisit our outlook from the initial turmoil, and now we have this bounceback phase that seems to be favoring growth again. we came into the year pretty optimistic about the economy, about earnings, and we thought that would carry the day. we see tighter credit spreads. we see stable equity valuations, but rising earnings pushing higher. that's still our view for february through december, january notwithstanding. i think if you were selling the early losers in january, you've gotten whip saw pretty bad about this. it's probably a cautionary tale to not overreact to the first couple of weeks of the year. jonathan: just a chart of crude right now, 1.5%. we're just short of 90. we've had a month to move in energy equities, up more than 23% year to date. that's a little mother a month. for the people that came into this year holding on to that story, because it's really performed well for them. what if i see giving them now? what do they do? >> i think a combination of two things. one, sort of the cyclical trade

to start the year, coupled with the russia-ukraine tension. it's hard to disentangle those two, which have more primary factor in driving the oil price higher. what we're doing, instead of spilling out of energy, taking profits, we're kind of scaling down, going into reafternooners. we don't want as much necessarily sensitivity to the price from here, because we don't think it's necessarily going to stay at 90, especially if the ukraine-russia situation is resolved, and i think we ultimately are going to get slower command growth as the year wears on. so we expect the oil price to go lower, but not getting completely out of energy, because it is still one of the cheaper sectors still making up for lost times over the past many years now. lisa: what's the consequence on a broader portfolio basis if energy prices do rise from here? not your base case scenario. for them to go to $100 a barrel and beyond. >> well, i think the interesting thing is the fed seems more willing to consider things, like rising energy prices, things that really can't control when

it's deciding to raise interest rates. what i would be wary about, if the oil prices goes to 100 or higher, is that going to make the fed more hawkish, because they really want to put a stopper in this inflation bottle? and ultimately does that hurt the longer duration areas of the equity market, the things that got crushed at the young of the year, like technology and some of the more defensive names. i'd be concerned about that bank shot coming back and hitting me. if it's going to result in the inflation story being more persistent than it would be otherwise because of the high energy prices. lisa: it's not just the fed, but if high energy prices persist, this could force the hand of the e.c.b., of the bank of england, of all the central banks that have sort of been on the fence with whether to make a move or not. >> sure, those are all central banks that are targeting core inflation, but there's no doubt the inflation problem for europe right now is mainly energy. they don't have the same kind of labor market tightness we do here in the states, so they should really be thinking about inflation ads transitory in a

way that doesn't seem like we're doing any more in the united states, but even so, central banks have a proclivity to become more hawkish. if we're talking about a systematic tightening of global financial conditions, that's not as friendly for equities, even though they're still starting off at a very easy place and only tightening from the loosest financial conditions we've had, there's still a risk there in that shift in direction toward tighter financial conditions that's less favorable for the credit markets in europe, but also for the equity markets. they've had a relatively good start to the year. tom: can the easy in china off set some of that? >> i think it can. places in the world where it's clearly weakening, like it is in china, those places are probably going to be more posture to do an easy bias, but most of emerging market is going in the other direction, tightening to get inflation under control. china is swimming against the current. it might make investors less nervous, so we've broaden the out the story a bit to include

china, we were kind of thinking e.m.x., but now china looks like a more reasonable investment case because of the easing biases they have. maybe more specific to china as an investment, less about does the entire world benefit from china easing? tom: you survived the whip saw of darkness economics, the optimism of the great trade guy dug lasses irwin. and then there's blanch flower. blanch flower is gloomy and cautious right now. j.p. morgan is at 1% g.d.p. can slow economic growth a la professor blanch flower, that that derail your market outlook? >> first of all, this is one of the best professors i've had. i didn't get a chance to have him, but that's the risk is that there's some sort of -- we just get a faster deceleration in growth. people are working down those savings. a lot of the consumer story in the fourth quarter, and i think in the first quarter, is going to be that consumers working

down excess savings. and once those savings have run out, the savings rate at this point, the going rate of savings is not as high as it was a year ago. so the risk is that certainly by the third quarter, fourth quarter, growth is much slower, and maybe the fed gets caught, maybe some other central banks get caught a little bit offside with the rate hike rhetoric and the action they're going to put to work in the first couple of meetings this year. so yes, the risk for markets at this point, the risk to the 10-year yield coming back down, and the equity markets really deflating is not necessarily the scenario where the fed is hiking a bunch of times, because that's probably a scenario where the economy is quite good, it's the scenario you point ought, 1% real growth by the end of the year. join is he on, danny blanchflower joining us tomorrow. thanks for catching up, brian. looking at the bond market, which is pretty stable. unchanged, behaving itself. in the commodity market, getting really close to 90.

just off the highs now. 89.72, the high. we're back to 8927. tom: it speaks to the unis not forward. we go back to this cliche that we're data dependent, but we're also data dependent in commodity. what do we do about coal? what do we do about some of the other topics? coffee alone, i've had to cut back on the coffee and accentuate the tang. jonathan: can you explain to the audience how much coffee you actually consume on a daily basis? tom: it's embarrassing. jonathan: frightening. tom: the only one who has more coffee than me is george clooney. jonathan: it's a lot. nespresso, you think he drinks that stuff? tom: of course, he's at his place in rome. oh, he's got the place in como above the place, but what he's really got is a place on a canal in venice.

it waves to him when you boat by. jonathan: down a basis point. look at crude, just north of 89. we talk about this at the moment with michael, next from new york, this is bloomberg. ♪

jonathan: that was the philadelphia federal reserve president catching up with us very recently. your equity market has a lift to it, off session highs, but still up nicely. on the s&p 500, up by .9%. looking at the bond market, real stability here. we come at a basis point to 177.33 after shooting. yield short of 120 on a two-year

yield. just calming down, going into payroll on friday and going into c.p.i. next week. the estimates that we've seen so far here at bloomberg, assist we put those together, they have a seven handle. barclays, 7.3. morgan stanley at 7.3. the number comes next week. ahead of payrolls, the a.p.d. report just dow. this is a taste behalf we could get on friday. here's michael mckee. michael: we're seeing a very good number from a.d.p. a very bad number, i mean, from a.d.p. they're seeing the first decline in months in payroll hiring. jobs lost during the month, according to a.d.p. members of the wall street forecasting fraternity have suggested that is a possibility, although the consensus is still in terms of nonpardon me payroll, the gain of 150,000. it looks like small businesses lost the most jobs, 144,000,

large businesses, 98%. by sector, 27,000 jobs lost in the goods producing industries, 21% in manufacturing. service providing jobs down 274,000 jobs on the month. looks like the sector we follow so closely lost 154,000 jobs. very dismal report from a.d.p. this is certainly what others from the fed have been telling us could happen this month, and, of course, the white house support going to be happy with the numbers, even though they know it was likely. jonathan: the white house is setting up for it as well. you heard from the national economic council director in the last 24 hours, predicting this could be a soft one. a.d.p. has come in with a massive downside surprise. we should run through the estimates for friday and just get our head around how important this number might be or probably won't be. 150 is the estimate. the range is plus 250 all the

way down to negative 400. i want to go through a select few numbers here. bank of america had a negative 150k for friday. want to go with wells fargo, neglect h.i.v. 100,000. the reason i go with those naps, wells fargo still believes we get five hikes this year and predicting a negative number this friday. ethan harris of bank of america still believe we get seven hikes this year. they still look for a negative number this friday. another 50 basis point hike in march, they still think we get a neaping active number on friday. this is from the fed to wall street, this number this friday does not matter. do you push back against that? >> i would push back slightly against that. one reason i wouldn't think it would have a huge impact on the fed is we'll get another labor report before the next fed meeting. so if this is an omicron-caused outlier, then we should see a significant rebound in the february numbers when they come

out. remember, we also have to compare the a.d.p. numbers to private sector hiring, not the total number. private sector hiring expected to be even lower than the overall 150 consensus, 113,000. that makes the a.d.p. number look even worse in comparison. lisa: how much does this really edify what patrick marker was saying? this is not necessarily people looking to employ others, but rather, people are either sick or not able to join the workforce based on the jolt survey yesterday. job openings climbing to almost 11 million. >> yeah, economists are still trying to figure out where everybody is and what they're waiting for, but we did have a number out from the bureau of labor statistics, the census bureau, rather. they count the number of people who say they are out of work, ill, in a special survey that they do, and almost nine million people said they either had

covid or were caring for somebody with covid during the survey this month. so it is very possible that we could see the labor force start to rise. there are also millions of people who say they don't want a job right now because they're afraid of covid. so it's hard for the fed to know exactly when or if people will come back into the labor force. but if they do come back in significant numbers, just on a delayed basis, that would ease some wage pressure, so you can understand why others are saying we need to be data dependent. jonathan: thank you, sir. looking ahead to next week. c.p.i. in america, there's two more rates before the next fed meeting in the middle of march. they're going to be key. tom: march 11 is for me the key date. a lot of them are really important, but i'm going with that. right now, in a broader conversation with michael nathanson, you've soon him quoted everywhere, as he deservedly should be. a senior research analyst, he

owns the phrase "content is king." michael, i want to go to apple, developing 550,000 almost 10 football fields of square feet in culver city out by irvine. there's a gigantic plant. are google, are apple, are they going to take over everything? >> it depends in which business we're talking about. i would say apple in video, probably not. google in advertising, probably yes. but apple doesn't need to dominate in video. they've done great on their own. but the google print to me is mind blowingly good when you think about how large that company is and how fast they're growing. >> we have heard from day one that google went public that there was a constraint on search, everyone, including me, has been wrong. what's your terminal -- what's the access of your terminal value when you look at search? do you go out five years or 15

years? >> tom, that's the point, right? everyone stays growth to double. we go out 15 years on it, because what is happening is, big picture, search is getting more valuable in the world, as many of us stop watching linear tv, as apple has put up blockers for privacy, search just goes up in value, because we're giving people intention. when you search, you search for what you want to see, and that is a perfect lead for advertisers. that's been our thesis, that people underestimate search, just the long cycle of growth here. that's the essence of the call on google. it's better than you think. lisa: do you think this reduces the emphasis on diversification that a lot of people are looking for with the cloud, with youtube, which actually disappointed? >> it's funny, because when we look at the stock, you don't need diversification for the stock to work.

just look at the core ad business. i think in google's world, they have so much talent, or technology talent, they have an incredible advantage in machine learning. they'd be foolish not to take that to other businesses. we're not giving them a lot of credit for google cloud or for other bets, but youtube in our world is really underappreciated asset, again, going back to the big picture, rising in value. so we don't underestimate youtube. youtube gives us enough upside for the stock without the other things really kicking in. lisa: how much is google an anomaly or a story of incredible strength and dominance, versus the representation of an economy that's really recovering with advertising spending going up so much, even without travel picking back up to pre-pandemic levels. >> yeah, that's a great question. i think it is because of searches and value in the world and youtube. when we wrap up earnings season

for media, other small ad companies, well, not growth, don't have problems with structural head winds here and google has a tail wind that is unique to google. tom: what did you and craig think yesterday of at&t doing a ballet from 15 billion spent on dividends to a model $9 billion, oh, no, we're not going to do that, we're going to do $8 billion. i believe the stock was down 6%. what does it say about escapades in entertainment? >> right, well, he would take a bow, because the past five years he's been saying at&t has the dividend. it says that the cost competing in streaming is incredibly high. that's been our call on streaming. and it says in the telecom world the cost is probably high, too, because all the promotional activities being done, because the 5g buildout. these businesses are a lot more challenging than the market

thinks. and again, it's easy when you look at google to say that's where you want to be. we're relatively negative on streaming. we're pivoting away from telecom in terms of mobile telecom. jonathan: just a final question for me. it's important not to let numbers like this slip or slide. this is a move to 10%. what do you make of that? names moving this much. these are huge amounts of money. >> jonathan, they grew their top line 30%, 30%. they've been around 20 years, right? search groups faster than youtube this quarter. and again, if you stop back and think about what we learned this pandemic, this is about digital transformations, and google has the best position in advertising because of what advertisers need to do. they need to pivot to search and youtube, and even though this has been around forever, the translation to the pandemic has

accelerated budget. i agree, this cannot be as good as it looks. and now six years later, it keeps going. jonathan: just phenomenal. michael, we appreciate your support on this program and your contribution this morning, as always, thank you. michael nathanson. tom, just bigger numbers coming off a much, much bigger base, and it blows me away every quarter we do this. tom: it's such a fascinating question, and, of course, believe it or not, if i'm wrong, correct me, as you do on artichokes, but i believe apple is a general statement is underowned by institutional wall street. there's still an immense doubt out there. jonathan: in some surveys, i've seen some of the same things. tom: ok there? jonathan: you did ok, but lori tracks that been i do, and they'll correct me if i'm wrong. lisa: that's why you're seeing a pop of 10% in premarket. jonathan: which is fantastic. the nasdaq 100 up 1.4%.

s&p up .75%. we need to talk about the big a.d.p. miss. it's setting it up for friday, too. is it important? we'll get into that in a moment. from new york, this is bloomberg. ♪

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jonathan: let's get started with tom keene, lisa abramowicz, and jonathan ferro. your equity market is positive. three days of gains and wednesday. set to become four. those two indexes with a heavy waiting with the nasdaq on alphabet and on to the s&p 500. alphabet delivers in a big way. deliver a stock split also massive at revenue growth. that is the stock story. i want to sit on the economic story. 10 year yields in one basis point. we just had a really soft adp report. -301,000. the median estimate was 180,000.

the range on friday ahead of payrolls is wide. -400,000 at the bottom end, it is the negative cohort i'm interested in. our a lot of is this friday print to the rate hike conversation. we heard from patrick harker who said we can look through it, i am focused on the inflation data. will this market look through it? tom: we are making a lot of fancy comments on artichokes. we are all dressed up. to be the single number on friday is 5.2%, which is average hourly earnings year-over-year. i don't care what inflation statistic you use. the fact is most of america is falling behind. jonathan: lisa is focused on jobs as well in job openings is an important point to make. if we get a week print on friday, can we still say this labor market is tight, can we still say this is about workers

not being willing to come to the market, including the big excuse of the moment, the justified one, has been omicron. lisa: if you compare the point you are making and tom is making, the average hourly earnings could increase if the story is the later, this is a dearth of workers and not a dearth of willing employers. does this accelerate this wish by the federal reserve to tighten policy? yesterday almost 11 million job openings just yesterday. jonathan: the median estimate friday 150,000. tom: right now with kroll institute, the global chief economist, that is an apt phrase for making grade -- for megan greene. how do you do with a three month moving average on something as emotional as the american labor economy. you single point it friday or do

smooth it out to a moving average? megan: i think you have to smooth it out. it is not like bad numbers on friday will be a surprise to anyone. it is been well telegraphed by the white house, the labor secretary. the number should look disappointing relative to what we've become accustomed to, but i have never ascribed too much meeting to a single data point. we know our labor market is healing. the question is where did all of the workers go and are they ever coming back? that is what the fed needs to know to be able to gauge exactly how tight the labor market really is and therefore how they should be set a their rate path going forward. tom: a hallmark of your work is to wait for the data. what you make of the present rate hike guessing parlor game? is there any value to it? are you saying i have to wait for pitchers and catchers to see

what the red sox will do and what the rate socks -- what the rate structure will be. megan: more the latter. i think in six to nine months will be having a different conversation around demand. demand will be weakening. supply strain constraint should start to ease, the supply of labor should also start to ease as the virus abates. that is assuming there not more variants and certainly not more deadly variants. as we move through the omicron wave a lot of workers will jump back into the workforce, those who stay home either because they are sick or taking care of someone who is sick. those who have not gone back because of concerns of being sick, and those web had a financial question and have stayed out of the labor market and a bird through that will have to jump at the labor market as well. i think that will take upward pressure off of wages and inflation. it seems like a competition to see who can get more hawkish about the path going forward at

the moment. that conversation could change towards the second half of the year. lisa: this does feel like a pivot point. i do not talk about whether people come back to jobs but which jobs they come back to. i see a lot of surveys people and manufacturing jobs are looking for office jobs. you've seen a complete seachange in terms of health care and education. how much will that increase wages in those professions that got hit the hardest and read the forefront of the pandemic? megan: people do not want hourly services jobs. people have been holding out based on the financial cushion they've received from stimulus measures to avoid going back into them. at some point there will have to be some capitulation. i think the jobs will be filled again. immigration is massively down over last two years and a lot of foreign-born workers were also filling those jobs.

going forward that she debate now that we do not have the kind of travel restrictions we have before. why did has proposed -- joe biden has proposed some easing of immigration regulations. it is the non-super regulated workers that are seeing wage gains. that should spread into leisure and restaurants and bars as well. lisa: will we see outside increases in some of these areas where people have to be enticed back to not have to go to work there? megan: wages have already risen quite a lot. as low income households burn through their financial cushion the fastest, as that cushion evaporates, i think the wage gains we have seen will entice them back to the labor force. i think the supply-side issue will abate. the best cure for high wages is high wages. people get pulled back into the labor force.

particular when this wave starts to abate, it already has, i think we will see the labor supply shortage. jonathan: can you help me an understanding how the data on friday will be put together. just got this note from capital economics. because ddp figures down everyone on payroll as employed regardless of whether they work or not, they do not capture the full hit from the them up surgeon absenteeism. they going to say with 5 million americans isolated midmonth, we suspect close to half a million of those will not have been paid at all during the survey period, which was not captured in the adp figures but will show up in nonfarm payrolls. can you explain the technical situation around how this data is put together and how it might show up on friday? megan: adp is often not a great indicator of how the nonfarm payrolls will go. the direction of travel seems to be similar in both of these cases assuming we get a

disappointing headline figure for tomorrow. it is down the classification. a number of people were not able to go to work because they had symptoms of omicron where they had omicron and they will not have received a paycheck. that does not show up in the adp data. that will show up in the nonfarm payrolls data. tom: i want to go transatlantic with you. right now what we are seeing is a yield structure that migrates higher at a europe yield structure which some would say stays where it is, maybe even with negative interest rates. what is the outcome for our viewers and listeners to such a spread, difference in yield across the pond? megan: we are seeing monetary policy divergence, which should push yields up in the u.s., but gently at the short end. ecb investors have started to pricing hikes for this year, but at a much more gradual rate than what we are seeing in the u.s.. that means you will still be

facing data fields in europe, whereas there'll be much more positive yields. i do not think the long end will go up significantly. i've been asked why would anyone buy 10 year government bonds with a 2% yield. it is because you could go elsewhere, europe and japan. the treasury ends up in the pleased shirt in the dirty laundry basket. jonathan: megan greene, wonderful as always. just to build on that number from capital economics, here is the number. they think they are could be a larger decline than the 200,000 drop their pennsylvanian. -- drop than their forecast. -250,000 this coming friday. lisa: how will this change the conversation? we have heard from megan and a lot of government officials they are expecting low print. does it make a difference if you do not see another commensurate

weakening that has lasting power? jonathan: should change the conversation, no. will it, who knows. neil dutta says going into today you have to treat the january jobs number as a bad weather event. payroll growth is delayed, not derailed. tom: meta, alphabet as well. the commanders are on the eagles 10 yard line. is there any parallel to this in england? the washington redskins are now the washington commanders. that is the joe theismann, one of the bravest guys in football who had to retire with a horrific injury seared in everyone's memory sunday. they are managing the message with the great joe theismann. jonathan: the old they became controversial very quickly and over time. the new name will be

controversial for about five seconds then everyone will have moved on. lisa: i would agree. there is a large debate. it highlights the political issue right now and the conversations affecting the elections more than ukraine russia and this feeds into that. jonathan: the commanders. tom: i think it works versus the guardians in cleveland. jonathan: you do not like the guardians? tom: it does not mean anything national. commanders we understand is the heritage of washington. jonathan: we have an important interview in the next hour. mary barra, the gm ceo. tom: asked her about the liens. -- about the lions. jonathan: we won't. we will talk gm and ev's. this is bloomberg. ritika: new figures indicate private-sector payrolls in the

u.s. fell by three in january. that comes from the adp national employment report. earlier said brief absences that workers do to omicron could overstate the number of people last month. the ginger jobs report comes out on friday. in the euro area inflation speeded up to a record in january. consumer prices jump 5.1%. none of the economists surveyed by bloomberg saw inflation accelerating. it is latest challenges european central bank's plan to pare back. in congress, there's is a growing republican opposition to a once bipartisan bill intended to make the u.s. economy more competitive. house republicans say the measure goes too easy on china while trying to aid the domestic semiconductor industry. the legislation is aimed at bolstering u.s. manufacturing research and development. hong kong has relaxed the rules it uses to release coronavirus patients from the hospital.

that is a move that could shorten -- the city is grappling with a no growing number of infection stressing its health care facilities. in pro football the washington team has a new name. the team formally known as the redskins will be called the commanders. in 2028 the team dropped -- in 2020 the team dropped its logo and name. for the last two years they've been known as the washington football team. global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i am ritika gupta. this is bloomberg. ♪

>> the good news is markets have been aggressively tiding future

monetary supply and tighter fed policy. the bad news is the fed has not done anything yet. tom: troy gayeski on the markets . lisa abramowicz and tom keene will clear the air on bonus season in the great misconceptions out there and we can do that with something -- with someone qualified. barry ritholtz writing for bloomberg opinion and far more in the game of financial management. covered guy who nailed differential equations like you and i did not. they are on some form of trading desk for syndication desk and they unload of $5 million bonus. how much does the firm make if the trader makes $5 million so they can afford to live next to barry ritholtz? barry: typically it is about a 30% payout. assume the firm is making $10 million. bonuses are the wrong way to think about it. bonuses perform two functions

for the employer's. first, it is a giant retention tool because it keeps people there until the end of the year. they do not get their bonuses until january and february. and secondly and more portly in the post financial crisis era, it is a risk management tool comic meeting there is a tendency for someone on a hot streak to lose a little bit of their humility, a little bit of optimism creeps in. if they know they will go into the red and not see any of the money, there is a tendency to behave a little better. even if there is a disaster, we pare back the bonus money, that offsets the loss. it works as both a check on traders and a risk management tool for the firm. tom: i take real issue with the who are these guys attitude. the answer is most of the people

making this money, it is not luck, it is prodigious math skills, prodigious quantitative skills, and as you have emphasized, terrific behavioral skills. barry: that is the key. let's look at some data to put meat on the bones. you have more than 1000 ipos last year. it was an all-time record, more than double 2020 which was an off year due to the pandemic. that does not just happen. there are people trying to get that done. you at record issuance of green bonds, of junk bonds. munis were close to a record. think about the s&p 500 up over 27%. think about everybody on a process getting a hedge fund. not everybody gets those bonuses. you hear about the $5 million bonus. you do not hear about the bottom half of that trading pool that they are lucky they are still

holding onto their job. lisa: to that point there has been a shift among some financial firms to increase the salary portion and increase the fixed cost and reduce the proportion of the bonus. what is your sense of whether that works as a strategic move or whether it backfires to the risk reward and risk management tools you were talking about? barry: it depends if you will end up with the two to your compensation system. you can set up rules for the nba but lebron james will have his own comp structure in the same is true for people like tom brady. they have to operate within the parameters of the team of the firm of the amount of revenue that particular desk generates. if you say to a guy or woman who is creating $20 million or $30

million or $50 million of profit for the firm, we will pay you on a flat salary, they are going to laugh at you and go across the street, where they will take that 30% bonus and get bumped up to 35%. when you're making tens of billions of dollars of profits for the firm, 5% bump in payout come it is millions of dollars. lisa: let's talk about the competition. we have heard from every single bank the war for talent israel. is the war for talent with other banks or with big tech companies? barry: it is both. yep internecine warfare and warfare with other fields. when i look at various mba graduates, law school graduates, people out with engineering degrees, we have watched over the past 30 years as different sectors are doing better or worse in the economy, they tend to draw the most talented people.

we have watched people run to technology, we have watched them go to wall street, we have watched that group go to venture capital, we have watched them move back to software and other forms of tech. look at what has performed the best over the past two to four years and that will give you a lot of insight as to where the top-tier grad schools are sending their graduates. jonathan: you told beat -- tom: you told me to buy google at 98. you will get a 20 per one split. you will have thousands of shares. how do you hold on to stock like google through thick and thin? barry: i am just about finishing up sebastian mallaby's new book -- tom: we talked to him yesterday. lisa: that is why i am bringing him up. towards the end of the book there is a chapter on sequoia

and sequoia started out as an early investor, but when they ran the numbers and figured it out, selling into an ipo, they left so much money on the table they recognized the transformation of the economy from the industrial age to the computer age, which was very hardware driven, to the current age, which is software is eating the world. they ended up setting up subsequent funds to not only hold on to growth stocks but also set up a hedge fund so they can bet on the downside when they see software and cloud rising, they want to bet against hardware and old telecom. you have to recognize all the different phases of a company lifecycle. when we look at something like google, and i'm with your guest, i cannot call alphabet, it is google. they have had and are likely to continue having a dominant role

in our mobile and desktop internet for a wild to come. i cannot tell you if that is five years or 50 years. nobody knows what is next, but it has been a fantastic run. the only reason a lot of people who have been writing google for a long time should be selling it is at a certain point you do not want any stop to be 20% or 40% of your holdings. that is too much concentrated risk in the best way to light that up is to say i am going to sell 1% of this every month for the next three years. tom: out of time. barry, go get your washington commanders merge as they change from the redskins to the commanders. just brilliant on the bonus conundrum of wall street. lisa: especially at a time when a lot of people are criticizing the banks and setting the hide from structure is why they do not have as much momentum. this making the other side.

tom: somehow facebook and amazon may be a little bit more important than they were 72 hours ago. stay with us on bloomberg radio and bloomberg television. good morning. ♪

jonathan: big tech bouncing back in a big way. good morning, good morning. the nasdaq flying. the countdown to the open starts

right now. >> everything you need to get set for the start of u.s. trading. this is "bloomberg: the open" with jonathan ferro. jonathan: from new york we begin with the big issue. big tech bouncing back. >> the maker cap tech companies. >> stunning results. >> alphabet isabelle whether for the industry. >> that is bringing comfort back to that port of the industry. >> going from a trifecta of tail wind. >> we are at a turning point. >> a sea change in terms of fed policy. >> there are dips worth buying. >> it requires a more careful look. jonathan: