>> this fed is basically in the market. >> markets for the first time are facing less liquidity and tightening economy overall. >> the risks are the fed has to be more aggressive. >> it is not ideal for the fed, but perhaps a better people. -- evil. >> this is bloomberg surveillance with tom keene, jonathan ferro and lisa abramowicz. jonathan: for our audience worldwide, this is bloomberg surveillance on tv and radio alongside tom keene and lisa abramowicz i am jonathan ferro. takei tends at 195. tom: yields are on the move, this is a must listen and watch for all of you. i'm going to look at the real yield, it is moving. he mentioned the two year yield,

we are in a 2% 10 year watch. jonathan: 195 on tens, we started the year at about 150 on a 10 year. what gets your attention now, the level or speed? tom: the rate change. we are going to go all in this hour. we had a big event friday, i got it wrong, we all got it wrong. it proceeds into tuesday, that is the headline. jonathan: we've got a big event thursday, cpa around the corner. lisa: the significance of this more -- moment, he of a concern that percolates over, then people come in and they brought the dip. you are not seen people come in and buy the dip when it comes to treasuries. that is significant at a time when it is really yields increasing into not inflation expectations, which have been staying constant or going down. jonathan: there is another difference here, is not just the fed but the ecb setting up to do the same. maybe the back end of this year,

but that is not what we experienced the last cycle. the ecb set out. lisa: that is why people are looking at the pool of negative yielding bonds. it has gone down to the lowest level since 2015, how much does that change the dynamic of the global bond market? jonathan: and how much is it teams the dynamic of the equity market? good morning on the nasdaq, down a quarter of 1%. yields are breaking higher by three basis points, 18486. higher to the rest of the curve. euro-dollar down to 11424, breaking the other way down 1.5%. 8997. lisa: let's see how long that lasts. slick at what be are looking at today, the trade balance is posed to be the most significant deficit going back to 1991. a lot of good people slowed purchases, they have been stockpiling inventory to get

ahead of possible supply chain disruption. at 1:00, the beginning of a slew of treasury sales. $50 million, it is interesting to do this at a time when yields are at the highest level going back to before the first wave of the pandemic related selling. this week will be interesting, tomorrow we get 10 year notes being sold, $37 billion. 23 billion dollars of three year notes, i am wondering if that will be a well bid, whether people start to rotate back into longer duration because they start to expect incredible numbers of rate hikes to translate into lower long-term growth. aftermarket, peloton reporting earnings, there is a speculation of a possible takeover, that boosted stocks mildly yesterday as we talked about possible amazon and nike, we got that transition with the ceo and cofounder stepping down today. jonathan: confirmed by the company moments ago, thank you. this is the most bearish i

have's -- have ever heard. let me just say, he was not constructive on the equity market. tom: everybody knows i'm a huge fan of robert doll, over the many decades he has been a resilient bowl, -- bull, then december happened. he said this is a moment where the usual dull changes. the december call was stunning. are you backing the market after a 10% correction? robert: our target as we said a few minutes ago, who would have thought we got it so fast? i am neutral, i think we are going to have a very volatile but friendless market. earnings tailwinds, valuation headwinds. that is the big change you've been talking about. the fed made a hawkish pivot in the market, -- and the market is slowly waking up. tom: let's see a factor

analysis. what matters, individual stock selection, sector selection? international sales? robert: all of the above. i think you have to be positioned for companies that can produce the earnings and cash flow and not expect valuation improvement. i think the opposite. that takes me more in a value direction, i want to own financials in a rising rate environment. energy on a pullback, i want to own that, too because the world's demand for oil is moving up and supplies cartel. lisa: you are bearish and everything, you've got pockets for you see value. equities even though they are performing bonds should struggle to seek out positive return for the year. what does that mean in terms of your advice to some of your clients? how do you arrange into deal with the fact you may expect no returns at best this year? robert: rebalance. if you've not rebalanced, equity

weighting because of the games of the last for years is higher than the target. bring it back to target at a minimum, that is the first thing. the second is to make sure your portfolio is not overly populated with growth stocks that have done so well over the last few years into the last few months. need to cut them back some. for goodness sakes, if you have been totally in the u.s., stand up, take about and do a dollar cost averaging outside the u.s. for economies are picking up. i think europe is not a bad place to be, the emerging markets still have a challenge with china's credit problem. i would stay with developed markets. jonathan: do the brick peripheral yields worry you? robert: i think it is a signal of the theme. valuation headwinds. when the supply or amount of bombs selling at negative interest rates just bonds --

bonds drops, we need to pay attention. jonathan: do you think central banks can pull off what they are discussing at the same time together? robert: that is a very good question. you are starting to hear people talking about as they move interest rates up, companies struggle with supply shortages, labor shortages, could we have a significant economic slowdown? i hope not, i do not think so. we will debate that. tom: i want to go to your university, every institution is having huge trouble trying to figure out asset allocation. do you look at the march away from basic common stock ownership is constructive as a diversifier, or should people get back on board to good old, american stock market? robert: i think stock still have a long-term place in portfolios as the central piece of what you are doing. i think bonds are going to be

challenged for some time as interest rates normalize. if you can find alternatives that have bond like returns, bond like volatility, those of the kind of places you want to be. tom: he is huge on pacific rim, can you be large on pacific rim? robert: i think the pacific rim still serves faster growing, albeit slowing china and india. they are still good places to be. jonathan: then he the world to open up for that to work. we are seeing in hong kong and china right now. that is going to be a problem. i wonder what your views are, we just caught up with dr. amesh adalja who was discussing the difficulty china would have opening up. we need to see something happening with supply chains. robert: no questions about it, i heard the interview. you are right, it is legitimate to be concerned. those supply chains have to open up. i think a year from now, we will

solve a noticeable piece but not all of the supply chain problems. that is part of the inflation problem, part of companies not being able to satisfy consumer demand. so we can solve a few of those, that is good news. jonathan: what would make you bullish? robert: if you told me the interest rates do not have to go up. i can't say i even get there. we have valuation headwinds, when they go up they come down. 223 pe where we were just too much ago, not appropriate for an environment -- two months ago. jonathan: fantastic to see you a regular basis, thank you. let's play wall street roulette. piggy bank. lisa: -- pick a bank. lisa: b of a. jonathan: from jp morgan, we believe equities are on the upside of the cycle is far from over. the fed is unlikely to keep

moving further into hawkish territory, at least relative to is priced in currently. they are the two main camps on wall street. lisa: we are looking at with you believe inflation will concede to persist longer, whether the data we got wrong last year will continue to surprise in terms of persistent inflation versus a fed that watches a slowdown on the data and pivots the response. jonathan: the weakness seems to be the concern of some. tom: the back half of february? jonathan: if you can get me a single month, i would pay serious money. tom: i have trouble with back half quotes. for those whose heads are spending, trust me with great humility my head is spinning. two guests with two different views, to different outlooks. both of them with massive academic credits. the divide defines every interview we do. jonathan: never seen it bigger. the previous cycle, blanchflower

did not want to move. but the numbers we are talking about, the destination of deadly , that rate has got to be higher. what did he say? fantasyland. tom: i think people know i am not a fan. steve major, who is in the blanchflower crew but models that rates go up, we heard that from frances donald. deep into february could be interesting. jonathan: the limiting aspect of the bond market selloff, still looking for 150 on tens and tuesday. brian levitt joining us later from invesco. euro-dollar negative tenths, 11420 five. yield higher by three basis points, let us rounded up. 185 on tens. this is bloomberg. ♪ >> that has been a flurry of

diplomacy pride of the iran nuclear talks in vienna. it suggest negotiators are turned to close in on a new agreement and a deal would allow iran to resume mix boarding oil in exchange for limits on the nuclear program. in canada, justin trudeau is blasting protest by truckers that has halted commercial traffic to the u.s. at the busiest border crossing. drivers say they will not stop until all covid restrictions are lifted. he says the protesters are humbling the economy and trying to undermine democracy. in the u.k., consumers held back on spending last month. value rose 7.4 percent january compared to the same month in 2020, the most is increased since april. nine out of 10 adults are concerned about the impact of rising inflation on their finances. chinese estate backed funds intervened in the stock market today, a strong recovery from

the biggest drop going back to august. it is intended to slow the pace of declines. big changes on the way at peloton, the fitness company share priced slowdown in demand after the cofounder is stepping down as ceo and becoming executive chair. he'll be replaced by the former cfo at spotify and netflix. it is what it calls a meaningful reduction of its workforce. global news, 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg. ♪

>> we listen to precious concerns -- russia's concerns in our own. the u.s., european union, nato allies throughout europe have put forward ideas how we can find a common agreement that will strengthen collective security for everyone. jonathan: that was antony blinken, i am jonathan ferro. futures and negative quarter of 1% on the nasdaq, treasury yields delivering a little bit of a lift. up two or three basis points,

194 on tens through 130. again on tuesday in the commodity market. 8951. stock of the morning's peloton, looks a little something like this in the free market. early trending, we trade lower. done by 8% after rally yesterday , 20% corporate positions will be gone. 2800 global jobs will be cut. the top of the company, a wind for the capital investor. john foley stepping down, he will become executive chair. the former cfo at spotify stepping up. the question now, whether barry mccarthy once a dance partner or wants to fly solo? are they open to a takeover or not? tom: he needs to get the financial ratios in order with the new regime.

5:52 is when i walked in the door. the first thing i look that, down 150 billion. this is about a 35% haircut off of modeled fiscal year 2022 capex, that is a big cut. they are really cutting in. i think they are cleaning up as a first-order condition. he is grizzled, far more at netflix out of williams college he's got a huge track record of action. he is a let's go guy. in america, people really care about it. particularly in the march madness. you really want to know? mccarthy has one of the coolest degrees in the nation, he has the privilege of studying with james mcgregor burns at williams college. if you get to study with james

mcgregor burns at williams college, you cannot do better. jonathan: why do you know this? tom: this is what i live. i studied with egon stark, anaerobic bacteria. [laughter] jonathan: every single time. i have immense respect for how intelligent you are. you know things i would never team of thinking about learning. when you say things like that -- [laughter] i used to drink when i was a kid. i'll ask him off the record another time. stocks down 8%. tom: are we done? coming up, australian curling. bloomberg question correspondent, joe, we've been talking about the linkage of economics and politics, great conversation on the pandemic. what is the to do list for the

people assisting the president? what is the mandate for february into march? joe: watch the numbers go down is the hope. it is interesting to see headlines from yesterday, from the view of the white house, jen psaki was asked about this in the briefing. what is going on in new jersey, and connecticut, delaware? democratic governors are saying with the mask mandate, let's go back to local authorities. in the case of schools for new jersey, the case for the indoor mask mandate in other states, this may not be the white house's issue as we go into the spring. this is going to evolve to the stated and even more local level, where does that leave joe biden? it is a question we are asking following the news this week. tom: we can bring this end, john does not understand been part. you're going to go to the been part, no one is wearing a mask?

joe: you can go to the u.s. capitol and see people not wearing a mask. it depends on what community you are in and what crowd you are in. we saw the new governor of virginia across the river in alexandria at a grocery store, no mask. a woman from the next aisle over said read the room, year in alexandria. this is going to become a hyper-local issue. reminding everyone last evening as i was heading home from the broadcast here in the d.c. bureau, the national cathedral's tolling bells to mark 900,000 dead. it was the middle of december they were doing the same for 800,000. how quickly this very it will burn out and what we are left with in the spring will answer a lot of these questions. lisa: are they getting anything done when it comes to legislative agendas and washington, d.c., considering the fact we are facing another funding gap? joe: great question almost any day.

we are not talking about a government shutdown, that is news. the government runs out of money, so to speak, february 18. there will be a continuing resolution, the need more time. need to hammer out the appropriations bills, looks like it will happen for the first time since october. who have a full year budget in washington. that should not be a news headline, this year it is. jonathan: thank you. don't miss dan off on bloomberg radio. -- standoff on bloomberg radio. [laughter] tom: that is how scripted we are. in the bean pot, it is a big deal. i knew once, i do not member why. jonathan: maybe you can look that up. tom: this is a great and beautiful february, like groundhog day, but better.

lisa: it refers to the regional dish of boston baked beans. there you go. jonathan: do they do them on toast or separate? tom: the way the waitresses talk to you at dragon park, you would have loved it. jonathan: why is that? tom: every meal is a bit domestic. jonathan: usually when i talk i have to repeat myself to understand the accent. i'm not sure how this career has worked out stateside, but has so far. done a 1% on the s&p, nasdaq down about half of 1%. the nasdaq breaking down a little bit as yields breakout on tens. tom: 10 year real yield is moving. jonathan: 132 on tuesday. lisa: we are looking at not necessarily in fonte should -- inflation expectations. jonathan: what do you think that looks like? lisa: narrative shift. tom: i love narrative shifts.

[laughter] i can't remember, it was after arrowsmith. jonathan: from new york city, this is bloomberg. ♪

♪ jonathan: live from new york city, here is the price action in the equity market. down .2% on the s&p. the nasdaq down by .4% as yields breakout. 2s, 10s, 30s. goldman, bmp speed, and levels. 2s, up three basis points, the highest since early 2020. 10s at 1.95, the highest since the summer of 2019. 10s up around 40. we have done speed and levels. let's do synchronization and destination. it is synchronized this time,

not just a fad, boe. the ecb may join the rate hiking party. that adjustment year to date gets my attention. tom: it is a transatlantic move. i don't remember how we did this in the last section, we were having so much fun, but it is important. what if we get an inflation surprise thursday? what does it mean for the boe? jonathan: we will find out on thursday. if we got a downside surprise, i imagine you can recalibrate. can you recalibrate off of one data point? the destination piece is there. how far can the central banks take it? the fed, ecb, boe? lisa: given the lack of conviction in markets on that

destination, you may get a pretty big recalibration. jonathan: like payrolls on friday, didn't matter until it came out. then it really mattered. let's say good morning to romaine bostick. romaine: one of the biggest movers is peloton. speculation about john foley, who is out. john mccarthy is in. it will be interesting to see the strategy that he takes with the company, whether it will be a standalone company or whether mccarthy positions the company for a buyout by another company. shares down 7%. the numbers are almost immaterial at this point. a decline in the number of subscribers, that was worse than expected. the reason this is an acquisition play, that

subscription revenue was on fire. at least with the core customer, this is still a business. tom: i know you will be at the close, but are we actually going to see mccarthy set this puppy up for a takeout? romaine: that is the speculation. he was at a couple of other silicon valley startups. his whole m.o. is getting these companies into financial shape, get them out to market. spotify was his biggest success without direct listing. he didn't say what he would do in the press release but the speculation is warranted going forward. pfizer also out with earnings. a lot more happening after the close. tom: right now, kathy jones joins us, fixed income

strategist at charles schwab. i want to go to the schwab retail investor. i have a vanilla total fund, blended portfolio. forget about the yield, on a price basis, down 5%, annualized down 12%. for retail, that feels like a bond/bear market to me. kathy: i would say that we are in a mini bond bear market. very difficult to get drawdowns in excess of 3% of the market rent large. when you are down 5%, probably qualifies as a bond bear market. we are not in the camp that says this is regime change going into the 10 year bond market or even one-year, but you are seeing a

decline, as you would expect when rates start to come down. tom: when you open your monthly statement three months in a row and it is sell, that is a bond market. lisa: whether people see their bread and sell more cash, or whether they hide out in some of the securities, especially if we are concerned about the consequence of rate hikes. how much are you continuing to double down on that duration call? kathy: we have had a short duration called for some time now. a couple of years. we are starting to advocate taking on more duration as yields move off. one thing you'll see as we get into the rate hike cycle, yield curves flattened, and you are probably pretty near the peak in the 10-year.

as be get into the rate hike cycle and we see things flattening, we advocate taking up more duration. start to add duration because the market has gone a long way already to build in this rate hiking cycle. we are already seeing financial conditions start to tighten a little bit. we're on the verge of probably seeing an interim peak. lisa: we had the 10-year yield at the highest levels going back to late 2019. 1.94%. this is an interim peak, but do you think this is the peak of the cycle? kathy: probably for this cycle if the fed and other central banks follow through on what they say they will do. we think this cycle is pretty powerful. the fed is using both quantitative tightening and rate hikes to bring down inflation, to slow the economy.

fiscal stimulus is already a thing of the past, will fade. as we look out over the next year, defined as the cycle here, we think we are close to the peak. lisa: you point to some economic data showing that you are starting to see a slowdown in the pace of the economy. can you give us a sense of smell done in the economy versus in inflation, whether it makes a difference for the two? kathy: typically some signals that we watch are like the global pmi, they are starting to roll over. personal expenditures start to ease up, which is not surprising. those are indicators that usually precede a peak in inflation. we all know inflation is a lagging indicator. there is also the problem that as oil prices and gasoline

prices move up, the erode spending power. as a lagging indicator, inflation will start to come down. tom: it is nonlinear to me come down from 7% down on inflation. what is a single-point trip point for psychology, under 4%? kathy: i would think so, but i would point out, market-based inflation expectations have not moved up that much. when you look at the michigan sentiment survey, those have become more elevated. although the long-term outlook is not for much more than 3%. the trip point would have to be gasoline prices. people are sensitive to what it costs to fill up the tank.

i don't drive, so it is not an issue for me, but people are sensitive to gasoline and food prices. if we start to see gasoline prices come down later in the year, that will change some of the inflation fears. jonathan: lisa is the only one that drives around here. lisa: i grew up in new york city, and i relate to that statement, yet. jonathan: that is because you are so rich. you go skiing on the weekends. lisa: i learned to drive because i went to fargo, north dakota and begged the person to teach. jonathan: do you want to go more into detail? lisa: i don't. [laughter] jonathan: you are a european bank trying to compete for talent, and the regulators as we have other ideas. reporting this morning out of switzerland. credit suisse is cutting its

bonuses by 10% after swiss regulators pushed back on higher pay since the banks worst year since the financial crisis, according to people with knowledge of the matter. tom: another great bonus article out today which alludes to have narrow these mega bonuses are. i take issue with saying that everyone at credit suisse is getting a mega bonus. it is a narrow group. if they are in switzerland and the regulators are not going to let them get their one off, why are they working? jonathan: they can get data somewhere else. we know that from the likes of jp morgan, goldman sachs. lisa: you'll see a huge question as to what talent remains, whether they just bifurcate the pool and give some to the top

performers and push away the people who are not. jonathan: is it that usually how it works anyway? lisa: either it is that or they risk losing their talent. this is a pretty tricky negotiation considering what we have heard from other banks. jonathan: two years ago, it was deutsche bank getting a story like this. now it is credit suisse. tom: they have been challenged. it is the unique zurich thing that we have experienced. jonathan: coming up, congressman french hill, who knows a bit about markets. we are down .2%. this is bloomberg. ♪ ritika: one day after meeting

with vladimir putin, emmanuel macron goes to ukraine to meet with that country's leader. he says his discussions could form the basis of their next steps. the u.s. is losing patience with china regarding trade commitments reached during the trump administration. american officials say they have not seen any real signs of beijing making good on its commitment. billionaire peter thiel is leaving the board of meta to pursue donald trump's agenda. he will focus on backing republican candidates to the senate who about the former president's policy. a divided u.s. supreme court has dealt a blow to minority voting rights, reinstating an alabama congressional map that only

creates one district likely to elect a black representative. the ruling ensures that alabama will use the previous maps drawn. bp boosted share buybacks. the british energy company will repurchase another $1.5 billion in shares using surplus cash from last year. global news 24 hours a day, on-air, and on bloomberg quicktake, powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg. ♪

>> a lot of uncertainty, but what i will say is, demand is strong.

you can easily see a further tightening market throughout this year, but more than anything, we should expect some volatility. at the end of the day, we don't know what the price of oil will be. jonathan: who does? the ceo of bp there. down .2% on the s&p. crude down by more than 2%. yields higher, that seems to be the story in the treasury market. just short of 1.95. tom: let's get to peloton. kriti gupta has more. >> we are looking at it from its debut going back to september of 2019. the chart looks pretty similar to other pandemic stocks.

zoom, netflix, they had that same shape, essentially a round-trip, for the radio audience. peloton is now back to levels where it was back at its ipo two years ago. not only is peloton having its own issues in terms of keeping and growing its subscriber base but it's stock has been a round-trip. tom: thank you very much. a little bit of visualization. much more after the close. we like to take great pride in saying, ok, sell side, who got it right? simeon siegel is a senior analyst at bmo capital markets. in april during the first pandemic, he stuck his head out and said it would not work.

maybe he said underperform. what did you see in april 2020 as you were using the peloton? simeon: i was definitely on the seat. we watched a product that people loved, extrapolated to go further. the question for us was, was the pandemic going to be a pull forward of demand or expansion of the? we saw a meaningful deviation between the numbers and the stock price, and that was why we effectively stayed there. tom: very mccarthy will have to talk to you about how you got in front of this. talk about the universe and potential universe mr. mccarthy will have two grow unit revenue. is it there? simeon: my team has done a lot

of work on connected fitness. i'm a huge fan of the sector, a tremendous opportunity. we saw a question around inventory management and brand protection. when brandt don't have competition and their audience is stuck at home, they don't have to market it. when there is competition -- there is a lot of up-and-coming exciting competition. you have to promote it. barry can look at this and say this is a phenomenal brand. hello todd is one of the most -- peloton is one of the biggest brands to humanity right now. focus on health, recalibrated the business. but as you go forward, that has an impact on growth. you need to take this band-aid, rip it off, focus on what needs to be done. what we need to remember is there is a human element here. a lot of this cost cut will fall

on people and that is the reality, but that is where we go from here. once they have figured out who they need to be, that they can get the focus at hand. they still have 2.7 million subscribers. that is really nice. lisa: this is not just in terms of subscribers but also data. doesn't make sense for any company to buy it? simeon: i think the acquisition conversation is interesting because a large company didn't buy them when they were on the up and up. the notion that they want to buy something that is a fixer-upper now has more questions than answers. i have not done this survey, but i think we can assume that peloton subscribers are probably prime subscribers. what it will add is a big question. right now we are seeing demand and engagement falter. his peloton simply too small

right now to matter to the largest companies in the world? you think about other companies. apple was conspicuously absent. here is a watch. we have to ask the question is hello todd is better as a standalone, which means pricing power. should they be raising prices instead of cutting price? that is the question to be asked, rather than do they fit into a larger business that probably already has access to data. lisa: what would make you bullish on this company without the idea of selling itself? price increases, something internally in terms of strategy? simeon: i would love to get bullish on this company, i think it's a great product. we need to know that the management team is aligned with the future possibilities of the business, that they should know what they want to be when they grow up effectively.

at the same time we downgraded hello todd, we upgraded elle brands. a that people said was dead, but they sold $5 billion worth of product. what were they doing? they were under earning because they were overselling. you think about supply and demand economics. what victoria's secret did is they decide to sell less and charge more. elle brands became one of the best s&p stocks that year. then we can talk about the stock price. the reality is restructuring stories don't sell on multiples. tom: i don't want to front run your clientele at bmo capital markets, but is today a regime shift where you can adjust

from your stunning underperform to something different without giving away the secrets? simeon: it's not an issue of front running my client, it's a bigger issue than that. last week, we spent time publishing a deep dive looking at the expense savings. we just got something similar to that. the question of what happens next. suggesting that you are going to save a lot of money is the opposite of kitchen sinking. the conference call will happen soon, so this is a lot of questions to answer, but we need to understand where the company wants to go from here, and with the information we have right now we have an underperform on the stock. jonathan: simeon siegel of bmo capital markets. an important lesson on loving the product by questioning the stock. lisa: especially if the world is

leaving their apartments and exercising in other ways. tom: you can go through the workout regime in the break, tom. from new york, this is bloomberg. ♪

>> i think it is important for investors to take pause. >> bonds are down but not out. >> there is a little bit of peloton and everyone, a little bit of netflix in everyone. >> we are starting to see some growth here is in the markets. >> this is bloomberg surveillance. tom: there is a little bit of peloton in me, and i mean a little. there are three of us, pick out the