cost and inflation materials, >> inflation hurts, unemployment hurts stop >> where did the workers go and are they ever coming back? >> we think it will be dicier. >> this is bloomberg surveillance. jonathan: it's payroll friday from new york city for our audience world wide, good morning, this is bloomberg surveillance live on tv and radio. the equity indices are positive. tom: it's a moving jobs day. the morgan stanley shift shows beautifully in the 9:00 hour.

it's an indication of where we are for the jobs report. 400,000 bodies? jonathan: we can settle this before the show starts. the estimate for morgan stanley is negative 215. scarlet: that's not even the number i'm watching. it spoke wage number and participation rate. even though this seems like it's negative because workers are not there is not because of a lack of opportunity. you can expect wages increased intentionally more than previously expected. jonathan: i'm looking at cpi next week. the high 7.6 and the low is 7. tom: with all the distractions, we need to underscore that the inflation of next week change because of the historic data we

saw yesterday from the bank of england and even more stunning, the shift from ecb and christine lagarde. it comes down to execution of business plans stop i would point out that the revenue take of the successful 4, apple, amazon, microsoft and google is 20% per year last year. jonathan: lisa is shaking her head. she thinks it's something else. scarlet: we are talking about $1.9 trillion companies swinging in value by 25%. we are looking at $200 billion swings one day for another. how did this get baked in after years of not seeing moves of a couple of percentage point per

day? this is a game changer when we don't have a backdrop. tom: i would look at business execution. the most important earnings announcement of the week was ups, imagine the challenges big brown goes through. they hit the ball out of the park because they executed. mccormick spices went up to a record high yesterday, 5% revenue growth off of italian seasonings that you put in your artichokes. they are killing it on execution. jonathan: i think you are on two different pages this morning. the nasdaq is up 8/10 of 1%. if you've lost track, we are positive by about 1% on the s&p 500 step the euro is positive.

we've got a lot to talk about with the ecb and we will talk about that later. scarlet: i'm talking about $200 billion swings and tom is talking about mccormick spices. it does tell the story. it's possibly the first negative reading we've seen. i am not that interested in that. it's a labor force participation rate. does it stay so far below pre-pandemic? are people leaving after coming back in because of the omicron variant? how does this affect earnings. it could push things up to them annualized level up to 5%. some of the lower tier paid

individuals are the ones that remain out of the work force. 1045 a.m., we will hear from president biden. how does he dovetail the knee for more financial spending when you have unemployment rates up 3.9% and lower. how does he fill roles and infrastructure plans? we don't have enough workers. does he talk about immigration work force programs? how does he dovetail the reality versus the goal. vladimir putin and xi jinping are holding their first in person meeting for the first time in 10 years. i find this fascinating as the winter olympics kickoff stop the relationship between russia and china as there are increasing tensions of ukraine and russia and the fact that they supply so much of the world's uranium, how do we look at this new alliance between china and russia and how that might be the biggest message coming out of the

olympics? jonathan: we will catch up with all that a little bit later this morning. looking forward to the gucci. tom: they have people to carry that stuff for them. we have a lot of notes from guests. powell's current inflation fighting mode makes more likely that a new policy euro will occur. why do you think that's the case? >> we want to make sure that investors understand that policy risks have gone up. the facts on the ground in the economy have not changed. the federal reserve approaches in question. when we have seen large turns and open ended monetary policy

after the guidance to suggest this trend, we have to be concerned how the fed will react. it's policy impact. we see a pretty significant policy impact of the federal reserve tightens their tools. we have in through a shock to the world economy that has been tremendous turmoil. closest thing we can compare it to is a wartime economy. that's the kind of underlying supply-side we have had. we think repair is coming. 20% in the u.s. economy in the fourth quarter, inventories went to decline to one of the largest gains in history. we need more of that to rebalance supply and demand but the progress is there. we have enough patience to wait this out.

tom: you can take it over to vietnam as well. come out of the war for whatever reason and the inflation like we saw in 1947 and it was not talked about but the great eisenhower disinflation. your linkage of the equity market in the economics, are you modeling a disinflation vector off of the inflation we see right now? >> we have to agree with chairman powell is supply and demand have to grow at similar rates. inflation is a threat to expansion. if, for some reason, we cannot have more stable prices while we are not conducting more stimulus, we see a slowdown in the demand side of the economy, the absence of stimulus since one q 2021.

there is a tailwind of strength and it seems to be coming down but are we talking about a supply-side that we can't have patience with? what if covid spreads to china? that will give us a relapse. what can we accomplish with -- when demand hardens. i'm not saving economy is heading there but after wartime when you cannot stabilize prices, you don't knock inflation down. you will not get that purchasing power back. scarlet: we are running out of time but did this shift any of your convictions because we are reframing an ecb move at the end of this year? >> it creates a picture that banks are running out of juice

this year. we think they will be more patient but simply not avoiding all rate hikes in 2022. jonathan: wonderful to catch up on this payrolls friday. the ecb did not hike interest rates but that's the closest they have come. this is the only indication in more than 10 years. tom: you and i saw it in real time with different properties but the markets reacted with a consistent force as christine lagarde spoke at a germanic -- at a dramatic angle. jonathan: you mentioned deutsche bank and what they have to say about it.

the effective fx markets has been driven by the fomc stop they close out the euro-dollar short and they go along but we look at the big adjustment in the rates market. lisa: how much does this affect the bets when people were going overweight europe? i wonder how many massive shifts in strategy in conviction happens in the next couple of trading sessions. jonathan: we have not even mentioned crude. tom: this is an unspoken story, it's really on the move. jonathan: it is grinding higher. we are on this payrolls friday. we will talk about the story this morning, futures dipping into negative territory, down 1

/10 this is bloomberg. ♪ ritika: amazon is giving the market back some of what the meta-platforms took away. it's poised to add almost 200 billion dollars in market value. that would be the biggest single dig gain in the u.s. stock market in history. it raised the price of amazon subscriptions. in the u.k., boris johnson's government has many of his officers resigning in the wake of a scandal. in beijing, the chinese president met with russia's vladimir putin.

he attended the opening ceremony of the winter olympics. they exchanged views on strategic security. vladimir putin is courting china at a time when the u.s. is talking about sanctions for russia. west texas intermediate hit a seven-year high of close to $91 per barrel which is up to 4% this week alone. this is bloomberg. ♪

>> earnings season continues. bloomberg is fastest with the numbers and analysis.

bloomberg, the fastest numbers and analysis you trust. jonathan: payroll is two hours away, from new york city, this is bloomberg surveillance. let's get straight into it, the pop on amazon goes a little bit and then fades. positive by 11.6% but it will not keep this market up on the s&p. seven weeks of gains on wti. year to date, up or than 21% and that is the headline. this administration probably doesn't want to see this, u.s. average gasoline price the highest and 24 -- since 2014.

tom: we saw bank of england out front in terms of inflation worries. the number next week is 7.3%. unleaded gas, this is a standard that everybody uses. it is within half a penny of getting back to the record highs. suddenly, this cost-of-living story is front and center. jonathan: lloyds is 7.6. you can explain away disappointment on payroll by talking about omicron but as we go into next week, the cost of real wages, the wage adjustment relative to where inflation is coming you see it captured in the sentiment numbers. tom: a political football.

i love the new york giants tweet that tom brady retired after losing two super bowls. we have to talk about ukraine? no, the islamic state? no, we have to talk about cost-of-living stuff what is the agenda for the biden administration? >> these are pump prices. this is potentially how you will not keep get reelected if you have gasoline prices higher and the entire wage story will be pinned on that especially today. when they have a good job number and people ask questions about inflation, everyone feels this, they have it that there is a recovery in the job market but they cannot do that today. they will blame it on covid and

inflation will be the key hurdle. this kind of headline will get attention from people. tom: we will speak with the secretary of labor today. marty walsh, the former mayor of boston. what does he think of the biden tone? are they finessing this? 7% is not acceptable. >> for the jobs number, they flagged it that it will not be a good month. they will say they are dependent on the fed to do this and won't pivot to build back better. i imagine he might mention it today. lisa: how much will they dovetail in the green of that and supporting the fossil fuel industry, a fine needle to

thread for them. >> is the energy transition far enough along where they should not be focusing more on whether the government and the private investment community is in the fossil fuel world? you are seeing higher prices and that will affect consumers. the michigan consumer sentiment, regardless whether you are republican or democrat, yorkie concern is 75% are saying inflation. -- your concern is 75% inflation. what matters when they go into midterm elections will be where inflation is and where individuals are when they pay their grocery bills and filling up the gas tank. jonathan: is there a phone call they can make right now? >> if they callriyadh and put

more finesse and that relationship with this was always going to be tough. the trump administration really welcomed riyadh. they welcome the crown prince who is not the king. the president of the united states, there are number of people that said if they want to get attention, it could be the ones that move the oil market and the resident needs to pick up the phone. the administration has not willing to do that. there is some talk especially when it comes to the natural gas market, there has been talk in the fossil fuel industry but the tone from this administration as opposed to the prior administration with the fossil fuel industry is they felt they

have been treated with hostility and there is a number of experts in this administration who are fantastic and climate but do they really have a number of individuals in the fossil fuel industry and that's where the domestic pressure. jonathan: welcome to new york city. did you see the headlines from the governor of the bank of england? can you imagine if the head of the federal reserve said what they said yesterday. he said don't ask for a big pay rise. when the bbc lease with that headline, that's not good news. in the sense of saying we need to see a moderation of wage hikes, i don't want to sugarcoat that stop it's painful but we need to see that you get through this problem more quickly. that's the situation we are in. energy bills shut up for many

people in the u.k. yesterday and mortgage cost went up as well in the bank of england governor is saying don't ask for a big pay rise this year. lisa: they would be eviscerated in the united states. there is a nuanced argument about who is seeing the pay raises whether it's at the top and that will get passed along to the bottom in terms of earning power. in terms of earnings, higher wages are viewed as a good ink so people can get ahead of the price increases we are seeing globally. jonathan: are they worried about people asking for a pay rise in the united kingdom? tom: it has to do with the weight of the u.s. economy versus a much more service sector smaller economy of the united kingdom. yesterday was stunning. jonathan: i agree, it was fascinating.

i don't think many people anticipated this. futures down 1/10 p. moore in a moment from new york, ♪ ♪ this is bloomberg.

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jonathan:i lost track of this week but we are up 1%. the alphabet shot higher end took the market with it. futures are negative on the s and p. the nasdaq 100 is holding out to gains. let's get to facebook with the biggest market cap drop in the history of the u.s. market yesterday. today up 8/10. we could have the biggest market cap pop in a single name in the history of this market following the biggest drop. can you keep up with this?

lisa: worthy earnings really that extraordinary? maybe facebook had start warnings but can you argue that these massive mega cap companies that account for such a big proportion of u.s. indexes saw a dramatic change to force these massive increases or declines? jonathan: well ruled -- where will the confidence come from if you have moves like that? tom: it shows the separation within the market on this jobs day. there are two corporate america's. this is about technology and application of technology, whether it's direct and others using technology like ups, they are the winners. jonathan: people might say the

market is struggling to price things at the moment. let's look at crude. we are still high by two basis points. there are estimates for the jobs report today. crude is out 1.7%. this is a bigger and bigger problem for central banks around the world stop they don't want higher inflation expectations to become deeply embedded. you don't get to cut out energy from your world stuff central bank's cannot do that anymore. tom: there are two brilliant economists the bluebird -- and the bloomberg trenches doing the

work. lisa is watching wage inflation. it's real and we are all falling behind. there was a piece of the week a few days ago on brents. how bad is the housing market? >> good morning, this will be a big feature of the inflation dynamic as we move into this year. we know how hot the sales market has been over the last 12-18 marks -- months and inflation -- and rates are rising. there may be some signs that things are leveling out to some the repo as we move into a higher interest rate regime, those would be homebuyers pushed back into the rental market stuff this is going to drive a category in the cpi which is 40% of core inflation higher over the course of this year.

ironically or perversely, the more the fed does to rein in inflation by raising interest rates, the more that will make it less favorable for homebuying and drive up prices even more. tom: you are a claimed for the study of the x access. we have 7% inflation next week. how many sevens in a row do you need when jerome powell sounds like mr. bailey in london? >> those who are watching the underlying components of the inflation data realize that transitory is not panning out the way folks thought it might over the course of 2021. we can see some significant basic effects emerging on the horizon. not in time for next weeks report but as we get into later in q1 and then q2, you will see

big swings on energy, automobiles, those reopening categories. we will see what's really driving inflation. rents will be one feature and we will get a much clearer sense of what's happening on that front. since it is jobs day, we are not going to get that clarity in the january jobs number. we can inc. of what happened in january as being equivalent to a massive snowstorm disrupting the economy. workers did not show up for work and that tends to distort the payroll number which i think could swing into negative territory. i said take your december number and put a negative sign in front of it and that's as good a forecast for the january payroll number. i stand by that. when we have a month were potentially lower wage workers are shut out whether it was a

snowstorm where they were calling in sick to work and not being paid for work, that means the average hourly earnings skewed to the high side and i think that's a real risk in today's numbers. lisa: perhaps a payroll distortion and week might not be able to get that much in terms of signals. the base effects include gasoline and oil prices which are expected to go down. they have continued to climb significantly with wti up 21% year to date. how is this stickier inflation when other prices are going up? >> it appears to be growing at a slower pace. we had year on year cam paris and's from the lows and oil and we are not retreating and i'm not sure we will is the entire

world bounces back from block downs and disruptions. -- from lockdowns and disruptions. it will be very difficult to sustain that going forward which means energy is a share of the increase in the cpi. it will start to fade into the background along with things like automobiles and airfares and hotels and other reopening traits. when that happens, rent will become front and center. rent inflation does not reverse until we head into the slack producing events of an economic downturn. fed tightening does not, the rent situation. lisa: governor bailey said he doesn't want this to be a sticky situation. >> i don't think asking people to not get a pay raise is economically productive. i think jay powell will steer --

will steer clear of that. jonathan: can you imagine the governor of the bank of england saying that, not asking for a big pay rise this year? not the greatest message to be sending. tom: that was the oddest jobs day conversation. we've got omicron and all that but this is about the cost of living. the conversation with secretary walz today will be fascinating. a bloomberg correction. javier blass has a book on oil. we squeeze out a new high on aaa unleaded. jonathan: it's a big problem and

it could be hanging around. it should stick around and that's why many think the fed will frontload rate hikes. this is what bank of america said this morning. tom: i don't know about the negative returns but i'm watching growth. i would suggest jp morgan is way out front on this with this quarter sub 2% and that's slow growth. jonathan: they are coming in a little bit more. lisa: mohamed el-erian made this argument where you will get to slower growth regime.

what we are seeing now is even if the fed does nothing, you will see that slow down which might be sharper because they will have to move faster and you could see more appetite by which will be reduced. it's such a difficult moment, how the fed policy is considering the lack of real wage growth is not the same as 1970. jonathan: have we met the limits of pricing power in america? is this the story this year? lisa: amazon increase the price of their prime membership by $20 in the stock surged by 15%. they were saying we can pass this on and everyone cheered. at a certain point, it seems they can kick things up. jonathan: i thought prime is that much? maybe i won't hold onto it. i don't use it anymore.

i'm not sure i get things enough delivered for the one hundred $90? lisa: it's like $134. that's the first thing you thought of? jonathan: i thought about canceling it. i've gone through all the streaming apps. tom: everybody's doing that. jonathan: $119-one to $39. -- two $139. tom: people watch the man the lori and and then cancel it stuck on amazon, they have a lot of math. people don't leave when they raise the price. jonathan: i won't stick with them. $139? the prices on amazon or not that great anymore. lisa: i will bring you the

soapbox next segment. jonathan: equities are flat on the s&p. positive on the nasdaq. this is bloomberg. ♪ ritika: the u.s. jobs report could be a tricky one. the median estimate shows a gain of 125,000 jobs in december but the individual forecast is all over the map. revisions and seasonal factors, white house warns that they are misleading. amazon is coming out with new steps to fight the corunna virus. social distancing will be proposed at the tuesday executive council meeting. that will require three shots and a rapid covid test all hong kong residents.

republican senator is being widely criticized for comments about ukraine. senator josh hawley says the biden administration should have abandoned long-standing support or ukraine to join nato. he said they should focus on china instead. global news, 24 hours it day, powered by more than 2700 journalists and analysts. this is bloomberg. ♪

>> there is a little bit of peloton and everyone. there is a little bit of netflix

and everyone. now, maybe there is a little bit of facebook and everyone. jonathan: i hope there is no facebook at all in me. tom, do you have any in you? tom: not really. jonathan: equity futures are negative a little more than 1/10 of 1% with yields coming in on treasury on the tenure by about one basis point stop payroll is one hour and 42 minutes away. 10 year yields in italy are up. we are set up now for this central bank of the ecb to pull back from qe quicker than anticipated and then ultimately, perhaps set up a rate hike. a big move.

tom: it's back to the 70's and the deutschmark. maybe dollar level of descendant and sterling weaker seems to be the play all stuff deutsche bank is jonathan: jonathan: picking up on this. the federal reserve is in focus. the big pivot from the ecv yesterday, we thought the ecb president would hold tight. it crumbled in that news conference. we started this week by changing probabilities and where with the upside to prices,? could that be the one to look out for? jordan rochester will be with us today. the senior u.s. retail analyst of big box bloomberg

intelligence joins us. amazon is generating 9.4% revenue growth. you are telling me that prime up $20 matters? is that picking up dimes in front of a bulldozer for amazon? >> it matters because every penny of that flows to the bottom line. a $20 in crease is $3 billion going to the bottom line. that is huge. they are expected to generate $30 of profit. -- 30 billion dollars of profit. tom: online amazon ability is about 40% of online business. do you see them relentlessly growing it out above 70 percent? >> i wouldn't go that far but i

think they will monopolize the online space. amazon does about $450 billion in sales. they could reach $1 trillion. you are talking about a trillion dollar business online and they are the biggest online retailer. lisa: do you think what we saw in terms of earnings yesterday justified a $200 billion gain in the market cap of amazon? >> i think the story is going in the right direction. amazon was about driving topline and not worry about profits but we are seeing them drive profits today into not just the prime member increase. their business is flourishing. they think they can go to 35% in the long run. lisa: aws is where they are

winning or from google. you look at the pricing power and they are winning from retailers and then there is advertising step they see it as a growth area. are they monopolizing every business from all the other tech giants? >> they are taking share from anyone. these businesses are growing as a whole so there was room for google to grow and microsoft and along with aws. they could roughly grow $10 million which is relatively small. tom: did they not split yesterday because google got out in front of them? we wait a decent amount of time and do you assume that they join google or apple with a split? >> your guess is as good as mine. we think amazon is on fire to

continue. jonathan: a lot of people are not waiting for stocks let's but something like spinning off aws. is that a conversation or is that on the periphery? >> that has come up but we don't think it's likely. they are 70% of their profit so they want to invest in the retail part of their business. it limits their ability to really dominate the infrastructure needed and the transportation they need to fulfill these online sales. jonathan: why do we keep asking this question, what is a keep coming up? >> you could argue that amazon is working on each of its burgeoning segments. lisa: how much do you get

concerned that amazon gets a lot of income from another strategy and that allows them to lower prices to knock others out of the business? this one argument has pushed concerns and is being shrugged off every year. jonathan: it makes sense. i'm with you. lisa: you're going to tell me i'm cynical? jonathan: absolutely. amazon up 11.1%. the bond yields look like this, down one basis point on the 10 year. tom: i'm just listening to the gloom. jonathan: did we have a fallout? tom: this has been a strange week for our listeners and viewers. it's the oddest job day in ages. where gas and oil is is a bigger story than the jobs route or.

-- then the jobs report. jonathan: we have established for many people that they believe you should ignore the payroll number. the difficult part of being part of a market is it's not the same as the wealth, will we ignore that number? lisa: the way the market has been, i can't imagine we will. i don't understand where the bond market is not moving more in the u.s. why isn't there any tandem trade? central banks are moving faster. you have to imagine that everyone was talking about the backdrop of negative yields being this weight on yields and keeping them lower and suddenly we have the smallest pool of negative yields going back to 2018.

this changed the conversation. jonathan: coming up next, the payroll number could beat -200,000 and that conversation is coming up in five minutes. from new york city on payroll friday, this is bloomberg. ♪

♪ >> i think the frothier areas of the market will continue to have headwinds. >> inflation in materials, inflation and logistics. >> inflation hurts, unemployment hurts. >> where do all the workers go, and are they ever coming back? >> we have this narrative of fire and ice, and we think it is going to be icier. >> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. jonathan: payrolls 90 minutes away. 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 on the s&p -0.25%. 125,000 for this payrolls morning. tom: i believe there is a number that has never been a greater fiction and that number. it is a movable