♪ >> we absolutely think this is the year of the stock picker. >> you have to look for those companies with sustainable growth and market opportunities. >> i want to make a distinction between unprofitable tech companies and other growth areas of the market that are profitable. >> i think the frothier areas of the market will continue to have headwinds. >> i think we have to fasten our seatbelts. it is going to be a volatile ride. >> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. jonathan: i am just here to see tom's impression of someone curling for the olympics again. can we do that again? tom: never done it. [laughter] jonathan: futures down 0.1% on the s&p. we are negative on the nasdaq 100, too. lisa: look at those bond yields in italy. the question of the morning is

how far will the ecb allow yields to go up, and addition to the movements that tom was just doing. but where is the put of the central banks? you see yields move pretty violently upward. jonathan: up 13 on tens. it adds to a move from last week. tom: there's is a real mystery here. i go back to marvin good come from a controversial paper at the jackson hole meeting years ago. we've got the right guest coming up in moments on this. what is going to be the seachange on the shift from negative rates to positive rates within europe, and frankly worldwide? jonathan: president lagarde speaks a little later. your focus, what is it? tom: my focus is how she will readjust off of what you mentioned last week, the migration from transitory and the headlines over to the shock of what we heard in the press conference. needs some interpretation. jonathan: headlines throughout

italy and germany. the market just a little softer after the biggest weekly advance on the s&p 500 of the year so far, down about 0.1%. we are basically unchanged on the nasdaq 100 get yields up on treasuries, approaching 2%. after seven straight weeks of gains on wti crude, a monster year to date move, $91.60. we are -0.8%. lisa: that really goes to the geopolitical issues of today. we are looking at thursday for that cpi print, but today it is all geopolitics. german chancellor olaf scholz set to meet with president biden, talking about collaboration with respect to ukraine, with respect to russia. what kind of sanctions are they willing to put on the nation? what ideas to have with respect to oil prices, considering energy prices in germany have reached the highest level in decades?

we really heard olaf scholz explain how he's going to get ahead of this and what his tolerance level is with russia, given that they are such a huge supplier of oil. u.s. secretary of state antony blinken is going to be heading to australia, meeting with a number of allies in the indo pacific region to talk about china and shoring up support in terms of print aspects of the u.s. relationship in that region. i really keep going back to the connection between china and russia at a time when the olympics is going on, when you have geopolitical tensions according to the alliance in the west and in the east. the federal reserve is reporting u.s. consumer credit for the month of december after it surged to a near record high in terms of month over month increase in november. how much are consumers borrowing given that they are supposedly flush with cash, given that they are concerned about how much inflation is rising? jonathan: tom is on his way to beijing for an open spot on the olympic team.

we are so impressed. christyan malek lisman -- christian muller glicksman joins us now, of goldman sachs. reporter: i think --guest: i think we should into a bit more of a level debate. you remember, our framework is always level in terms of these rate moves, and now the market worries about what types of levels certain parts of the economy, certain parts of markets can deal with. we would argue that generally, most developed markets economy are probably higher than the

market is. conditions right now are a bit more favorable for you have seen sovereign stress, so eventually if the eu recovery fund supports growth, the market will probably be comfortable with slightly higher rates in italy, slightly higher yields, but in the near-term it is very difficult. tom: i want you to take the sum of goldman sachs thinking to the huge what if or mystery of how the commercial banking system and the financial system of europe in itself shifts from negative rates to a positive rate regime. does it do it with stability? does it do it with reaction functions where there could be instability?

what does goldman sachs perceive of that? christian: you make a great point. this is the other thing which is different right now compared to maybe previous periods of euro area sovereign risk concerns. the banks are doing really well. if you look at their earnings, if you look at the shareholder returns, dividend expectations, dividends paid are rising. at the margin, the restraints they have had during the covid that balance sheets are strong, and we know that rising rates are not bad for banks on the face of it. of course they are bad a recession, but if you don't, there's a direct link of profitability from banks to rates. a lot of people might push back and say wait a second, if the curve flattens in front end rates go up more than backend rates, that is not so great because banks are borrowing short, they lend long, but that is not completely true. we found the front end level of

rates can be a boost to profitability as well. lisa: this sounds like a familiar since the beginning of the year. we have to go along the euro,? -- go long the euro, change our portfolio. are you not singing the same tune? christian: with particular regard to the role of bonds in the portfolio, these type of strategies are under enormous pressure to rethink allocation. if you ask with regards to europe, this idea of what europe's place in the portfolio is, i still think that european assets are more resilient, or shorter duration on the face of it, and probably have more of a place in the portfolio in the coming years, subject to the

italian situation, sovereign risk not becoming an issue. our team would say we have better conditions to digest higher rates than we have been a long time. we expect spreads to write -- to widen, peak, and probably start come down as the growth picture confirms that it is not that bad. jonathan: when you look across your dashboard right now, will be flashing that would say of got to change on what is happening right now in europe? christian: the thing i have been worried about recently is not just what sovereign credit markets are doing, but what corporate credit markets are doing. you notice in the last week that the corporate credit spreads globally have continued to creep higher, but in particularly, what i find peculiar is the ibex

crossover. the equity volatility has been a bit too low considering how much credit has moved. so i think you've got to watch credit. credit we said already a few weeks ago will be a kind of signpost on if the market and the economy is really digesting the higher rates or if you are facing recession risk. jonathan: for people who don't understand what you just said, you are comparing the cost of protecting against credit risk against volatility in the equity market. just go through this a little bit more because i think what you're saying is really important. we are seeing the cost of protection increase and volatility in the equity market continue to trend lower. that spread, how does it reconcile? christian: credit is essentially following the equity world, a short equity put. so theoretically it is the same trade as selling a put.

the equity volatility should be very closely linked to credit spreads, and the crossover in the cds market is the liquid way to track what is happening in credit in europe and the slightly lower all of the parts. if you compare it, that has been ticking wider. the measure for european equity volatility has been lagging a bit. it tells you that may be the credit market is telling us there should be more concerned in equity markets. jonathan: that was a clinic. thank you, sir. christian mueller-glissmann of goldman sachs. tom: what it comes back to his ratio analysis, whether it is europe or whether it is here, and that is simply compare and contrast. i'm going to make clear, the 10 year real yield in the u.s., which i am going to call the benchmark of all of these dynamics, has really not given up the surge we have seen in the last 10 days.

it has held there, waiting for more news. jonathan: we've got this real yield story and this credit risk story versus what is happening in equities. in that second piece at the moment is something worth staying laser focused on as we work our way through this price action. lisa: in the united states, you have not seen a tantrum. what we saw seemed more tantrum like to a lot of people watching, particularly that index, which tracks the crossover between high-yield investment grade reddit, and the implied risk premium, the spreads widening dramatically. tom: she is salman rushdie again. lisa: no, basically people are getting concerned about defaults. that is the implication. jonathan: that is the right conclusion. the head of g10 rates strategy at bnp -- i tried to mike it simple and you confused everyone again. equities up 0.1%. from new york, this is bloomberg. ♪ ritika: with the first word

news, i'm ritika gupta. russia's vladimir putin and france's president emmanuel macron meet today in moscow. the kremlin says talks will be substantive, but it does not ask but they break through. russia has repeatedly denied that it plans to attack crane. the u.s. and the u.k. say they are now almost 130,000 russian troops close to the ukrainian border. in the u.k., a no-confidence vote on prime mr. boris johnson come as soon as this week. in minimum of 54 conservative members of parliament would have to support a vote. "the sunday times" predict that the total is approaching that. one observer says it is going to end in him going. over the weekend, johnson filled two key position after senior aides quit. a state of emergency has been declared in canada's capital over a protest against vaccine mandates. hundreds of trucks have been

parked in downtown ottawa near the parliament. the mayor's increasingly rowdy demonstrations owes a threat to safety and security of residence. frontier airlines has agreed to buy spirit. the price, 2.9 billion dollars in cash and stock. the private equity firm indigo partners owns a majority of stake and is the largest shareholder. shores of peloton are soaring today, said to be exploring takeover options. there are also reports that amazon and nike are making offers. i'm ritika gupta. this is bloomberg. ♪

>> good but better -- build back better has been presented over the last 7, 8, nine months. should they be parts of it you want to talk about different things, i think the president said there might be certain parts. my biggest opposition, it did not go through the process. jonathan: that was senator joe manchin, the democrat from west virginia. futures up 40 on the nasdaq, up 0.3% on the nasdaq, up 0.2%. yields climbing on higher intends in america.

let's call it a basis point higher. euro-dollar unchanged at 1.1415 in europe. a big move in the italian debt market. the two-year yield up another 11 basis points. just remind you of where we opened up this time last week, the two-year was -17. it is now positive 44. at the front end of any bond market, that is a massive move, as this ecb begins to mckay. huge pivot. tom: you look -- to make a huge pith that -- a huge pivot. tom: you look at the headline, it is new positive yield for the german 10 year. jonathan: up three basis points. you and i have covered this together for about a decade. i would go back to a conversation we had 10 years ago. i was in london. you were here in new york city. we were talking about the so-called japanification of the

german debt market. now we are slowly maneuvering this supertanker and bringing yields back into positive territory. tom: the real research idea here is the path from accommodation is massive. historic accommodation. where is neutrality? does anyone know? jonathan: this came from ethan harris. they have changed their ecb call, but they say in 2023, inflation will be sub 2%. hiking can only go so far. but what comes next, we haven't got there yet. this is just about -- about something as opposed to nothing. tom: we spoke to ukraine and russia earlier withhordern. she joins us this morning. off of joe manchin's comments -- annmarie: this week is obviously

going to focus on what that inflation print looks like, many say north of 7%. but i think you need to look at how the president spoke about the economy on friday when we had that surprise jobs report to the upside. the president did not mention build back better. president joe manchin's -- joe manchin said that is dead. but they are trying to talk about how they can help support the economy, and not moment he mentioned childcare and how having robust childcare and the government helping give families a little bit of breathing room to potentially help more women get back to work. so they are still talking about the economic agenda, but there has been a change in how they communicate that to the american public. tom: have they communicated it to progressives? there seems to be such a fraction between central and liberal democrats. annmarie: with the president not even mentioning the term build back better, he's clearly moving

a little bit to the middle a little bit more, when many in the party have said the president has moved too much to the left last year. this comes as we have a midterm election year. many are saying it is going to be a red sweep across congress. if you look at the most recent poll, but the american people think about the economy, the approval rating for the president stewardship at 39%. so at this moment, he's trying to get what he can done and what the american people want. we talked about this last week when he was in new york. the republicans are hammering the democratic party and this administration on three key issues, crime, inflation, and education. lisa: let's talk about the inflation aspect as it relates to previous legislation, not only the future. i was struck by jason furman. he said in an article, "the

american rescue plan was well-intentioned, but oversized. they erred on the side of too much." even democrats pointing a finger at some of these rescue packages we are seeing now. how much does that complicate future legislation? annmarie: it does complicate future legislation because that is why you can't get the likes of senator joe manchin on board. he thinks part of this is why there is a fueling of inflation. that is why he wanted to hit a strategic pause before we started seeing a real uptick in the inflation print. this creates a communication problem. but the white house would say it was better to go big and make sure they can shore up the american economy and make sure everyday americans could make in meet -- make ends meet than it was to leave them high and dry. this is also a massive talking point for this administration. why would you put more money into the economy when we are seeing higher inflation?

they would argue that whether it is childcare or lowering prescription drugs, this would lower inflation pressures. jonathan: are we doing a second round of happy birthdays for annmarie? annmarie: jonathan, you are in trouble. jonathan: i don't care. outside the white house, thank you very much. it is about building up the capacity of the economy. secretary yellen had this to say to us, because there had been a question about whether she would continue serving as the secretary. "we still have a huge amount of important work to do. i have no plans to leave the treasury anytime soon." tom: i was frankly surprised by the coverage over the weekend. we are typically at a time where you begin to hear jockeying about staff members and that. these are all exhausting weeks that these people have. i was quite surprised by the yellen comment. jonathan: people have been

asking around this whole debate around build back better. we talked about brian deese, the national economic council director, not doing many broadcast interviews. i have to say, and the last several weeks, they are engaging in a much bigger way. lisa: it is difficult because janet yellen is not necessarily a politician. she really was a policy member with respect to the federal reserve and elsewhere. . she has stuck to her guns and does not think it is because of the rescue package. the debate seems to be fraying in terms of people looking at a more entrenched inflationary regime. jonathan: she is not taking the governor bailey rise and telling everyone not to seek a big pay rise.

economists and central bankers scared of wage increases, but never telling off corporations about margins if you are at the central bank. i saw a lot of people make that comment on twitter over the weekend. it is true. futures unchanged on the s&p. from new york, this is bloomberg. ♪

jonathan: good morning to you all on tv and radio. we are positive on the s&p. on the nasdaq, doing ok. moving the other way on the russell, negative about 0.1%. not much price action in the equity market. tons to talk about in the bond market. your 10 year yield, 1.924 9%. yields up about a basis point. your two-year yield, 1.3 085%. yields up today in a massive way , your to date up by about 50 basis points. on the two-year, a move of 50 basis points in the treasury market area to this.

six trading days off a much lower level. your two-year in italy right now, 46 basis points, up 13 basis points on the session. that has got to get the attention of this ecb. that was a very quick move. goldman talked about the source, the level, the speed. the level is 46 basis points. the speed is what gets your attention. tom: i'm going to watch an attention meter for those in america today. the 10 year real yield, for that to break through to a new, lesser negative statistic would be a big deal. we are not there yet. in the equity markets, the drawdown right now, spx close is only -6%, so that shows the resilience that is out there. jonathan: you're going to call that resilience? it is pretty dicey at times. tom: yeah, there is a bull and a bear case, and i am not going to pick a side. jonathan: looking at europe, i

would have to say this is what i would say to people will run when this story is going to bleed out to the rest of the world and get dicey. look to credit, but if you start to see the euro weaken as opposed to strengthen, if you start to see banks not rally, but selloff because they are concerned about what is happening in italy, banks are just about positive, and they did nicely last week at times as well. lisa: this is what christian mueller-glissmann said. how much does this give christine lagarde runway to be hawkish? jonathan: underestimating the fed and overestimating with the ecb will do. let's get some single names this morning and say good morning to romaine. romaine: a relatively quiet day this morning as far as individual rates go. as far as what is moving, there is some m&a activity out there right now. spirit airlines and frontier are said to be combining.

frontier basically paying about $26 a share for spirit airlines, about a 19% premium to where we saw the shares on friday. it is actually putting a bit on other airline stocks out there. speculation about additional m&a activity. we should point out spirit and frontier, two of the smallest airlines in the u.s. based on revenue. even when combined, these companies probably would not rank in the top five or six , below alaska airlines. reports out of "the financial times" and "wall street journal" suggesting amazon and nike are considering bids to buy peloton. the shares getting a little bit of a pop this morning, 32% higher. these shares last week close to below the ipo price, just a little more than two years ago. alibaba shares down about 3% in the premarket. the adrs, i should say.

seems to suggest that softbank is unloading about $1 billion worth of adrs, so keep an ion those. snowflake up about 5%, getting an upgrade at morgan stanley. tom: mona mahajan has two of the most prestigious degrees out of the university of pennsylvania in computer science and across all of economics. she joins us right now with edward jones. i want to go back to the dreaded sophomore course statics and dynamics. it is the first course where you actually have to think about what is going on in math and in the engineering space. what are the statics and dynamics right now that matter in an equity market where our listeners and viewers are getting whiplash from this guy is bearish, this guy is bullish, this guys bearish, this guy is bullish? what matters in the statics and the dynamics? mona: it is a great point, and

thanks for bringing up my all modern, -- my all modern, -- my all my motter -- my alma mater, penn. we have had fiscal policy that now is pulling back the spigot, so markets for the first time in quite some time are facing less liquidity and tightening economy overall. but how has this play out in markets? we have seen valuation compression across the board. perhaps the most hardest hit have been speculative asset classes, higher valuation asset classes. but what we haven't seen yet is any sort of earnings revision downward, and that to us has been a positive sign. we have seen volatility around earnings reports throughout this season, but q4 2021 is still looking to be a good 25% to 30% year on year growth.

notably, 2022 look at moderation, but we are still looking at 8% to 9% positive earnings growth. for us, when you take a step back, we think the valuation compression story makes sense to us. we have seen that happen historically as the fed undertakes rate hikes, but we are still positive and hopeful that the underlying economy and the fundamentals look relatively sound to us. tom: what do revenues do? how do you link gdp and the assumption of slowing gdp back over to corporate revenues? mona: tear point, gdp growth this year overall probably still looking at three percent to 4% -- at 3.5% to 4%. as we get to q4, we are probably looking at gdp growth under 3%. how we are seeing that play out in corporate earnings, the front end and first half of this year

is very much driven by value and cyclical sectors of the economy. think financials, energy, industrials, a lot of those reopening plays. they have better comps in the first half of the year. they are going to see better earnings growth in the first half of the year. as we get towards the back half of this year, we are really looking back towards the growth and tech sectors to drive earnings momentum once again. as growth slows in the economy, investors tend to look for higher growth names. they also tend to look for somewhat more defensive names. we see areas like staples hang in there at the economic growth picture moderates, but store the above potential. lisa: have you changed anything about your investment view after last week, which a lot of people said was a massive pivot point not only for the fed, but also for the ecb? mona: we are certainly watching what is happening with yields. for us, what that really means

is as yields tighten, we think we could see yields move towards 2% here in the u.s.. that really does support value cyclical names. we tend to go back to our core playbook, which is the first half of this year will be driven by not only value cyclicals, but we do look outside of the u.s. keep in mind, not only does non-us and em perhaps have some catch up to play, but they are also less exposed to higher valuations, more speculative tech assets which tend to have been underperforming in this environment. as we get to the back half of the year, we are looking to opportunities forming in the tech space and perhaps somewhat in the defense of areas as well, but our core playbook remains value cyclicals, non-us em, and start to balance it with the more growthy names towards the end of the year. lisa: at what point do bonds start looking good again? if we get to a place where

growth is decelerating, as you expect, by year-end? mona: it is a great point. for us, bonds are down, but not out. we sent they have a place in the portfolio. you get a little bit of pickup in yields, especially versus government bonds, but areas like investment grade and even parts of high-yield have been a defensive asset, especially as we have seen equity volatility increase. as a defensive hedge in your portfolio that perhaps has pickup over cash and cash equivalents, in a year where we expect equity volatility to remain elevated, we think there is room for a bond portfolio. of course, and the overall spectrum of where you see your own risk appetite falling, but generally speaking, we think not only u.s. parts of high-grade, but non-us as well. we think there's opportunities there, too. jonathan: cameron crise just

publishing on the bloomberg, a reminder that tightening has consequences. how high do be to be yields have to go before the ecb really rates -- ecb reiterates a cautious approach? yields up on the front end in italy by 12 basis points. tom: this is more than just a compare contrast of the economy in texas. italy really fits in with the core of europe, something martin feldstein used to talk about all the time. you wonder how the core is going to react to this new world. jonathan: the size of the debt market in italy is just huge. to see the market up another 12 basis points, it is just the rate of change that is quick. lisa: at the same time, if the ecb can't say they are worried about inflation without a freak out, than they are held hostage. what sign does that send to markets if they basically say our job is to compress spreads in the euro region and the

peripheral region? how much does that create a policy that is really negative? jonathan: that is the multitrillion dollar question for 2022. how durable is the fed put? can they back off with inflation where it is, in the fives in europe and the sevens in the u.s.? lisa: how much do they try to jawbone this back at a time when it is not causing material distress in the sector, at least as of yet? jonathan: not yet. lisa: that is what everybody is saying. jonathan: i certainly agree. we are on the same page. ecb president christine lagarde coming up a little bit later. a speech, i believe come out of europe. coming up next on this program, jordan rochester of nomura on foreign exchange. don't miss that. futures up 0.1% on the s&p. from new york, this is bloomberg. ritika: with the first word news, i'm ritika gupta. this week, data expected to show

that inflationary pressures in the u.s. kept heating up at the start of the year. that will probably put a federal reserve interest rate increase next month on autopilot. according to a bloomberg survey, the consumer price index likely jumped 7.3% in january from a year ago. ember of the european central bank season interest rate hike as early as october. it went he five basis point increase is likely -- a 20 point -- a 25 point basis point increase is likely. dependent and china's restrictions to control it are still damaging domestic spending. travel and consumption during the just ended lunar new year breaks down from 2021's already low levels. people in china made 251 million trips during the seven day holiday, down 2% from last year and a 26% drop from 2019. in hong kong, the number of

coronavirus infections is doubling every three days. the city reported a record of more than 600 cases. that puts pressure on the government to wrap up -- to ramp-up restrictions as it tries to eliminate the virus. price renter is suing google for about $200 billion. case follows in eu ruling that says google reached antitrust laws by favoring its own comparison-shopping services. google says the company is looking forward to defending its case in court. global news 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i'm ritika gupta. this is bloomberg. ♪

♪ >> i think it is lowering the terminal rate, so even if term

premium is going up, i think the fed is going to have to cut rates next year because we have overdone it. that is overshadowing this idea that long-term rates should be higher. jonathan: love catching up with priya, one of the best in the rates market. priya misra, td securities head of global rates strategy. up 40 on the nasdaq 100, up 0.25% on the s&p. yields higher by a single basis point on tenzan america to -- on tens in america. euro-dollar unchanged at 1.1449. we've got a ton to think about. tom: kriti gupta is with us with a chart. kriti: let's talk about the majors. i don't mean baseball. i mean the currency pairs. the highlight of last week was the boe and the ecb. my chart looks at how that played out in the currency market. the boe talked about a 50 basis point hike for members trying to

tackle those dramatic jumps in the cost of living. the ecb a similar story, saying optionality is on the table. for our ready audience, the chart of the day looks at the euro against the pound, actually bouncing off the key brags that level. that is going to be a key technical level you want to watch going forward. to me, what was interesting is as we talked about a more hawkish boe, you would think that would yield a stronger pound, but instead, it seems like the ball is in lagarde's court. the more questionable what could happen next comes from lagarde. we will be hearing from her later today. i read the research. i read what everyone is thinking on twitter. the best kind of quote to sum this up came from our strategist in athens, who said the bigger the crisis, the bigger the silver lining for the euro, once again the ball being in the ecb's court. tom: thank you very much. with us is jordan rochester, g10 foreign-exchange strategist at

nomura. jordan rochester, of course, looking for weaker sterling. i love how you go deeper and look at belgium, say. if it is 7.9 private percent -- 7.9 5% inflation, it must be belgium. how big a shock is this? jordan: it is a big shock for economists and the ecb, who have been very focused on a german base effect that was going to kick in in january, and we got that, but those forecasts had not just looked to energy prices, the cpi could -- the ppi situation. as you say, belgium was the canadian -- was the canary in the coal mine. that had another explosive rise higher in cpi. i was on holiday last week, watching from a distance the markets from my phone.

the ecb had turned more hawkish, earlier than i expected. i thought they were doing q2 for you because of that inflation number, it has brought all of this forward. the question is, do you buy europe here? it has moved already. jonathan: the ecb wanted to the whole lot weaker. they went into negative territory on the depot rates. they did not turn back. that story could change. we could have a positive interest rate at the ecb, maybe in the next 12, 18 months. how much of a big change with that be for euro-dollar, for that currency pair? jordan: it could be a big deal. for me, it is about timing. we have a growth slowdown, a china growth slowdown, the trade balance going into deficit for the euro, but for q2 onward come our pass for euro goes to 1.18 by year-end. our risk is it goes higher than

that. we weren't thinking about raising rates by 25 basis points. if the ecb was to raise interest rates, why is that a big deal? you've got years of european banks lending to american corporate, aware that they've got zero to negative interest rates in europe and a positive rate of return. you could see that lending by european banks to american firms dry up as that yield differential will narrow, and that could really boost the currency. i'm thinking this more for q2, q3 onwards. lisa: how do you respond to people who say the ecb will pivot before that back to a more dovish stance because of what we are seeing in the peripheral spreads, the fact that there has been such a dramatic move upward in yields? jordan: it is a fair point. i have been on the inflation angle of this argument for months now, going into the end of last year and beyond, but now we've got peak inflation pressures from energy.

ppi is likely to cool off in europe. the wage story is also going to pick up. the inflation from today features into other factors. so it keeps the ecb on that path, but you are right to say there's a risk of periphery here. italian be to be -- italian be to be -- italian btp spreads are really going to weigh on politics. pmi's are falling. the only way to bailout the euro area is if you have some fresh fiscal stimulus, and i think that comes from china. as soon as the only bexar over, do with -- the olympics are over, do we see russia invade ukraine? do we see china pickup production again? two massive questions. for the time, the ecb are keeping their options ocean -- their options open. they have seen the market overreact. now it is a question of how soon

they end qe. that is why you are having people ask those questions. jonathan: can we talk about where stress would show up in europe? the last time around we sought on the periphery, and the banks, in the credit market. we did not see it so much in the single currency. when we were talking about the height of redenomination risk in the euro area, the ecb still had the problem of a currency that would not get quickly enough. -- would not we can quickly enough. how do using it would go if we saw this explosive move, but it would mean for the single currency? jordan: good question. the trade balance is basically in decline right now thanks to higher new prices, and exports to china have slowed down, so that trade surplus europe rot in to fix the situation for flows, that is going to not be the same as it was, so a strong trade surplus is no longer the case for europe. i think if we had the very

latest number, we would be in a deficit thanks to gas prices and oil prices rising. from a trade angle, we don't have that stronger euro impulse. from the financial side, because the euro is the funding here of all these high beta traits, going long u.s. stocks come along emerging markets, risk off his sometimes positive for the euro, so i am questioning how much does euro selloff if you have risk off, so i think that financial flow is so big that you have a stronger euro in the case of risk on, unless you think the ecb is going to go dovish again which i doubt they are going to do after turning slightly hawkish. jonathan: good to catch up. jordan rochester of nomura out of london. these are compex issues in the continent -- complex issues in the continent. jonathan: tom keene, lisa abramowicz, and jonathan ferro. futures up 0.3% on the s&p,

let's call it 0.2% on the nasdaq 100. your estimate, 7.3% in america. from new york city, this is bloomberg. ♪

>> inflation statistics continue to look extremely elevated. >> we are talking about inflation inlet. -- inflation in materials and logistics. >> i think we will be having a very different conversation around inflation and demand. >> evidence tells us we are going to see that turn. >> i think we are going to see it plummet like a rock. >> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. tom: good morning, everyone. thrilled you're with us here on radio and television. a follow one from