businesses in the state that don't check covid-19 vaccination status, citing high inoculation rates and low transmission rates. speaking in new york city today, the governor said after two long years, it is time to adapt. >> at this time we say it is the right decision to lift this mandate for indoor businesses and let counties, cities and businesses make their own decisions on what they want to do with respect to masks or the vaccination requirement given declining cases and hospitalizations, that is why we feel comfortable to lift this in effect tomorrow. mark: face coverings will still be required in schools. she would like to see vaccination rates improve for children.

-- a request for sergei lavrov for member countries to respond individually to moscow's demand. the policy chief will respond on behalf of the block according to a draft of a letter obtained by bloomberg. russia to the border of ukraine. russia has repeatedly denied it plans to attack ukraine. protesters blocking traffic between canada and detroit are further stretching and auto supply chain that is already worn thin. automakers indicate there is little impact so far but the situation could get worse within days. the demonstrators are showing their opposition to vaccine rules. global news 24 hours a day on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in over 120 countries.

i'm mark crumpton. this is bloomberg. matt: it is 1:00 p.m. in new york, 6:00 p.m. in london, 2:00 a.m. in hong kong. i'm matt miller. welcome to bloomberg markets. here are the top stories from around the world. risk on. u.s. stocks sit near session highs as the treasury route eases. we will have full market coverage and results from today's 10 year treasury auction cleared -- auction. plus a ceo of global foundries after the semiconductor company gave a bullish outlook on earnings and strong chip demand. and we will get the latest on the u.s. housing situation as

mortgage applications decline. peggy hogan marker of the marker construction group joins us with her outlook. the s&p 500 up 1.3%. yesterday was a little bit choppy. the nasdaq at 1.7%. tech stocks are doing better than the rest of the market. the dollar index down a little bit which is probably good news. you might think that if they expect rates to rise they would get into it for that reason. rates right now are not rising. here's the 10 year yield. one spot 9071. that is lower than we have seen to most of the session. we will talk to ira jersey about that in just a second. that's focus on the 10 year yield. it has really caught my eye not

just today but over the last week. if you zoom in and take a look at the larger trend, you will see the yield bumping up against 2%. we have been on 2% watch for the last three or four sessions. we are coming down a little bit away from that. 10 basis points away as we get the results from the 10 year option. let's bring in ira jersey, bloomberg intelligence chief rate strategist. tell us about the auction and how that affected the price. the yield moments before was at 190 three. >> now it's at 190. this was the best option we have had probably in the better part of ever. primary dealers got less than 10% for the first time. so these are investors who

really want these bonds. they came in in droves. the highest level we have had again ever. so this was one of the best auctions. hitting up against that 197 level, some people said maybe i will cover here and maybe i will use the auction to get out of some of my shorts. matt: i wonder about the draw to u.s. taper right now. it's been a safe haven trade and if we are not worried right now, then people would sell. >> he would think that if we were worried about eggs like inflation going forward, we were worried that growth was going to be strong and the federal reserve and other central banks were going to be aggressive and hiking interest rates, it would be hard to be a buyer here.

we are not looking at with the fed is doing this year or next year. a lot of investors are saying what are we going to be like in 2024, 2025. you might not get a lot of movement in the long end of the as the fed starts to hike and reduce the size of its balance sheet, you'll probably see front-end yields come up quite dramatically and that will flatten the yield curve which some people take as a sign of potential recession in 12 to 24 months once that happens. matt: taking what we have seen over the last few days in terms of the volatility rate and what you call the best 10 year option ever, what does that mean for the options we are going to see in coming days? >> the 30 year bond auction is tomorrow. you'd have to think that with

demand as strong as it was for today's auction that tomorrow might be ok as well. we have to concentrate on these options because that will be one of the first places you see signs of market fragility. the key level for 10 year treasury yields is 1.97%. 2% kind of meaningless on the charts. just under 2% is really going to matter. matt: and if we break through that? >> that was an important level a couple years ago. our fair value model shows about 2.2% is fair value right now for to new yields. we are still below fair value. we could stay there on risk. things like what's going on in russia has people worried that the fed is going to be too aggressive. we even said yesterday we thought it would be sluggish for the 10 year yield to get up to those kind of levels.

197, 2.1 five. above that and you are off to the races. matt: ira jersey, chief rate strategist for bloomberg intelligence. coming up, the rush for semiconductors continues. we will discuss the company's latest results with global foundries ceo tom caulfield next. this is bloomberg. ♪

>> on a wide basis, we are seeing costs go up and it will be with us for a while. particularly the cost associated with shipper leasing where we have had to pay -- ship leasing where we have had to pay much higher prices and that will stay with us quite a while. matt: this is bloomberg markets. i'm matt miller. that was the moller-maersk ceo. one factor pushing inflation higher across industries is the global chip shortage. in addition to freight rates, global foundries, the largest u.s. based provider of made-to-order semiconductors gave a bullish forecast for the current quarter indicating the rush to get tips continues of the shortages and they've got big fat margins as well.

let's bring in the ceo tom caulfield to talk about how long this is going to last. this is something you have been at pains to explain to analysts and investors. does it seem to you like this is the peak in terms of demand or is this sustainable? >> i would be remiss if i didn't shout out to our team. global foundries. they have come in each and every day doing their part to create the semiconductors the world needs. where does this go. we categorize this thing as a chip shortage or balance. what you're really seeing is a prolonged period where we are trying to keep up with demand but demand is growing. i think for the better part of the next four to five years, our industry will be chasing the ability to put capacity on line

to meet not only the demand in front of us today but the growing demand. matt: so are you investing to provide more capacity? are you concerned that everyone is going to do that and we will run into a glut? >> yes we are investing. we are doing our part. we started investment of 6.5 alien dollars to essentially take our output out 1.6 times higher. exiting 2023 as compared to 2020. and that gives you an idea how long it takes to spend the money and get the capacity. so we are doing our part. when we think of the industry and the capacity it's putting on, we have to take one big step back. we are half trillion dollar industry and it took 50 years of

capacity. this industry is going to double in the next eight to 10 years. it's because semiconductors are used in the very fabric of society, every business in every humans life. take about how much capacity you really need to catch up with this. there's 14 million wafers a year just in the sand we play in. the kind of capacity that's being put on is on the order of the mid-may be high single digits. demand is actually probably growing faster than that. so this idea that we are going to put too much capacity on doesn't resonate with us and the thoughtful analysis we have done. matt, are we facing the chip shortage for a lot longer? i hear what you are saying and industries that are near and dear to my heart like autos for example are telling us we put in 20 to 40 chips into a car.

as we move to ev's, that is going to grow by an order of magnitude. if we are only seeing single digits or even low double digit increases, that is not going to cover it. >> back to this idea that you're either broken big balance fixed. it's not like we won't know what to do with capacity. we will be constantly needing to make investments to grow with capacity. that's why economic models -- it's going to need partnerships. governments helping in those investments and our customers helping those investments to accelerate that capacity. matt: is the government money that has been promised going to be enough? >> the debate is it enough or not, i don't get it on that.

these are investments, they are not incentives. like any good investment, when you see the return in the types of manufacturing jobs and the economic activity created by creating good semiconductor jobs, they are going to want to invest more. let's start with the $52 billion. demonstrate how valuable that would be in creating the economics that worked for the industry and the economy and we will all want to do more on that front could matt: in terms of customers, i am sure they have come to you to try and log for the future. are you locking in longer-term contract as a result? >> i think a real inflection point for the industry was 2021. we exited with about 30 long-term contracts that on average of four years in length.

i think this is going to be the norm going forward. it's not only our direct customers. customers that use chips are coming to us wanting to reserve capacity so we know it is there for their needs as well. i think we will see more of that in 2022. natco does that come the norm going forward even after the shortages are over because they don't want to get caught in the same situation again? >> the past practices of this industry where foundries would put capacity on without any commitment even though it was custom the customers, i wouldn't call that a normal business practice. i think going forward, partnership investments is not only going to become the pratt this but it will be a normal practice.

matt: with mortgage applications falling, the supply chain challenge and mortgage rates are moving higher. our guest is peggy hogan marker. this is bloomberg. ♪

matt: this is bloomberg markets. i'm matt miller. the latest numbers from the mortgage bankers association showed mortgage applications. the index fell more than 8% last week. home purchases and refinancings also declined the 30 year fixed

rate stands at 3.8% compared to 2.96% a year ago. joining us for more insight on the market and specifically into construction is peggy hogan marker, president of the marker construction group. her firm is involved in residential hotel and manufacturing construction. i'm going to ask the region that you work in most. this is such a regional marker. are you focused on south florida? >> throughout the state but predominantly south florida. matt: what is the biggest difference between the market right now in previous years? is it a lack of everything shortage as we have heard it described? >> it's the perfect storm right now. obviously we've got supply chain issues and lack of materials driving prices up on top of that

because of the pandemic and we have fantastic weather and tax structure in south florida, we've got just a huge influx of people moving into the state permanently. matt: if you have people moving into florida, are they submitting applications to be your employees or do you see the kind of labor shortages as everywhere else? >> we have tremendous later -- labor shortages. we lost a ton of people in 2008 and 2009 and the pandemic hasn't helped. we've got tremendous labor shortages general contractor and subcontractor side. we have increased demand and nobody to build. matt: why do you think that is? or have been a lot of theories about the great resignation. there has also been a big change in immigration and flows of

people in and out of the country. what's the biggest problem? what's causing the labor shortage? >> i believe it's a combination of immigration as well i think there's a general movement within our country that everybody needs to go to college and not a clear understanding of the real opportunity that the construction industry offers as far as a career. there are true careers of people making hundreds of thousands of dollars with full benefits and 401(k)s and we need to get people back into our industry. matt that is something hopefully that you can solve in that way. the material shortage maybe you won't have to deal with forever. how does it look to you right now? >> i believe things are starting to stabilize. i think it's going to be a long road until we see any real change.

we've got a massive problem with once the things are actually built. there's a shortage of trucks and when the trucks break down, they don't have the appropriate pieces to fix them. it's a real bottleneck right now. matt: what does this mean for builders? i'm sure it makes your job a lot more difficult. what about margins? are you able to pass prices along? are builders able to pass along the inflation? >> not really. we are definitely getting crunched in the middle. the market can only bear so much. there's a huge demand and developers are paying prices that five or six years ago they wouldn't have paid. the demand is so high that now these numbers are making sense. we have really at the threshold

where things will slow down. we are not able to pass that down to our customers. it's putting responsibility on us as builders to be more strategic in the way that we are planning our work. we are buying things well in advance. we are buying appliances year in advance. sometimes before the prime contract has been fully negotiated. we are buying appliances because they are year and. we are coming up with options to get us through that, storing materials when we are ordering them well in advance. matt: is there any possibility that you and your competitors try to ramp things up to the point where we eventually have too much supply or is it too difficult to even meet the demand you see now? >> it's too difficult to meet the demand. we don't have the materials.

we don't have the staff. we are turning away work as are all of our competitors. we just don't have the ability to fill the need. matt: we really appreciate your time and your insight. i hope you get a little rest. it seems very stressful. coming up, we will preview the widely anticipated cpi data. pimco's north american economist. this is bloomberg. ♪

mark: i'm mark crumpton with the first word news. president biden is pushing for

more government spending on energy and climate measures. his economic agenda includes $300 billion in tax credits for wind and solar power. in japan covid restrictions are being extended for another three weeks. it includes shorter working hours for government subsidies. japan has resisted the use of lockdowns. most japanese still don't have booster shots. boris johnson plans to end covid isolation rules this month.

the prime minister says he expects to be able to lift them a month early. if you want to watch the super bowl in person, it's going to tossed you. that's according to ticket reseller take pic. -- it's going to cost you. that's a quinn to ticket reseller tickpick. -- according to ticket reseller tickpick. global news 24 hours a day on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in over 120 countries. i'm mark crumpton. this is bloomberg.

♪ john: i'm jon erlichman. welcome to blue -- bloomberg markets. >> protests against covid restrictions widen in canada. investors bracing for the u.s. inflation data tomorrow. the fed may consider the single largest rate hike in more than two decades. it is still a long shot investors are looking for a more magical quarter for disney after a slowdown in subscriber growth for its streaming service. jon: let's do a quick check on major averages.

obviously the hard-hit technology stocks have been in focus today as we have seen some of the concerns in the bond market ease off a little bit. the parent company of facebook that has been hit so hard after earnings. we are getting ready for our own economic super bowl tomorrow. i'm still trying to figure out the math mark crumpton was saying about the super bowl tickets. we wanted to just remind everybody this is the data point of the week. the cpi for january and if we look at the expectations, we are talking about the kind of price increases we have not seen since the early 1980's. he made that important point. bloomberg has been all over this story. would this be the factor that makes the call for the fed 50 basis points in a single rate

decision move higher for the first time in more than two decades? this data point is one we are going to be watching very closely. matt: this is still quite a long shot i think pricing is for a 30% chance. when you talk to market participants, they say the fed wants you to believe that they would do that. but the people we talked to don't really think the fed is going to do it. earlier today lack rock vice-chairman philipp hildebrand told us about his take on inflation. >> this is not an overheating economy. the idea is these are inflation dynamics, very unpleasant, but they are driven by supply constraints that will lead to a more muted stripe -- muted cycle

in the end. matt: some of the arguments that we have heard against this fed gearing up for major rate hikes is that they can't really do much about supply constraints driving higher prices with monetary policy. jon: tiffany wilding joining us, pimco's north american economist. nice to have you. everybody's on the same page that we've got some inflation in front of our eyes right now. we were watching the supply chain impacts for much of last year. we come into this year with a reality check and now it feels like that language is starting to change again. should we really be buying into an extremely hawkish central bank strategy. how are you thinking about tomorrow's data point? >> thanks for having me. i do think it is pivotal in terms of will the fed implement or announce the rate hike.

i think there is a level of inflation that could come out in tomorrow's report that will make that probability much more likely. we don't think that will be the outcome. we actually think that inflation can moderate a little bit and will be reflected in that report. for the united states you have to keep in mind and people are forgetting about this, a lot of the acceleration or most of the acceleration that happened in the fourth quarter was really the results of the story of auto inflation. in particular we had a hurricane which resulted in a lot of damage in autos and that shifted used car into the end of the year. we expect that kind of demand to really, starting in january. so we think we will get some moderation.

ultimately we think the fed won't go 50 basis points. certainly consecutive meetings starting in march. maybe even june is a possibility. i think it is still reasonable to price in some moderation and inflation here. as you suggested supply related factors and other factors start to fade. matt: as you look at the different categories, how much elasticity do you see? when i look at oil prices or average gas prices at the pump, that's the highest level we have seen since 2014. it doesn't look like opec has a lot of spare capacity and i don't know why, but we are not seeing the u.s. bring more of it out of the ground. you've got to get it out of the

ground. there are a lot of issues. >> i think you are absolutely right on that. obviously the transition from brown to green and renewable energy is playing a big role here so the supply response, the investment in rigs, the additional out foot that we normally see as a result of these higher prices, that's just not happening. you are seeing more elevated global energy prices. of course there's obvious brown to green transition type issues impacting europe as well. the renewable energy sources as a result of aberrant weather events in 2021 resulted in much more demand for liquefied natural gas in europe and that is driving up commodities.

certainly there is a lot of supply-side stories here. i think it's reasonable to believe that prices will probably remain elevated. you have to remember that prices is a different story than inflation. prices can remain elevated here. but you can still have inflation coming down because you are not having acceleration and prices as the fastest pace we have seen. that could still come down amid some of these stories that are still playing out. jon: helpful context. as we have seen this drumbeat building to thursday's cpi print , what else is going to be key on your radar? >> i think the obvious thing is the labor market in the united states. there is a key question around the extent to which you get some

labor supply improvements. this has been less of an issue in canada as the labor force participation rate has really reverted back to an improved over pre-pandemic levels. we have had a lot of retirements. there has been more health-related anxieties keeping people out of the labor market. labor market report will be key for february. obviously within that report the amount of job creation that we are getting but also the potential for labor supply improvements will be a key thing to watch. if we get another report that's very strong, the unemployment rate falls another 2/10, that certainly increases the amount of tightening that is likely to happen from the federal reserve this year. i would put the probability of a 50 basis points rate hike still

relatively low. i think central bankers can certainly go at a meeting by meeting sequential pace and that would be much faster than what they did the last hiking cycle which was more of a quarterly case. matt: great to get your insight, tiffany wilding of pimco. we will get the outlook from jason baz net. that's next. this is bloomberg. ♪

matt: this is bloomberg markets. i'm matt miller with jon erlichman. wanted to bring you some quick breaking news from the bloomberg

terminal. it looks like klarna is considering fresh fundraising that would value the company at 50 to $60 billion in valuation. i guess you could consider it a fintech. you could call it a start. i have been using klarna for so long it seems just like a normal part of the internet. it is pretty ubiquitous in germany. jon: if you can win over some of the key retailers at a time when people are looking for that next generation of fintech, perhaps no surprise that there are some interesting valuation levels happening in this sector. matt: investors are going to get a look at disney and its streaming future after the close reports earnings.

bloomberg's kriti gupta is here. >> the media side is the one that makes all the entertainment value and of course disney plus, 70% of their revenue comes from there. they're looking at 125 million subscribers. last quarter the estimate was 119. they fell short at hundred 18 million. the stock really suffered. the stakes are extremely high. kind of a netflix ask evaluation when it comes to the stock. they are kind of coming back slowly but surely. the first quarter estimate is about $6.1 billion. compare that to a year ago. once again, slowly making their

way back but not quite. matt: have you been? >> not since i was a kid. matt: but you went. >> it's an all-american childhood experience. you have to. did you go? matt: i have been to disney world, disneyland, euro disney, beijing. they have one in china. are you a disney visitor? jon: i would love to, but let's also bring in jason bazinet of the citigroup team. going online and streaming disney plus is the easy option these days. when you are analyzing this business right now, where are you putting the lions share of your attention? >> it's absolutely around streaming. the most important thing that has pressured disney stock is it's more about the street reevaluating what a streaming sub is worth because everyone is using netflix as a proxy for

what a sub is worth. when netflix disappointed, refit the bar. i will give you just one simple number. if back in august you bought netflix stock, you are essentially paying two times what a sub was worth. so when netflix had more muted net additions, the street rebated that and now it is close to parity. for disney, they are getting ready to ramp up their spending very heavily this year from 25 billion dollars to $33 billion. we know with 10 years of data under our belt that these companies spend our money on content, they get more ads. disney is spending the right amount to get the net ads. matt: do they have a deep enough

bench? netflix has a big library. disney, they have the star wars vehicles and obviously frozen and the rock. they don't have much else. i had it was interesting just the idea that maybe they would bite ella tom -- buy peloton. it's a different kind of streaming. they have enough product? >> no they don't. i will give you the paradigm for this. you do need those marquis tentpole events and then you do need sort of a lot of filler to keep the users engaged and we know this from the old hbo days. people would ask, why don't they spend more money on game of thrones or soprano's. most of it was spent on the old movies that hbo would buy. disney does have the temples -- tent poles.

while there are some pieces of content that are globally scalable like those tentpole movies, a lot of content has to be local. i suspect what disney will be spending a lot of money on is localized filler content to keep the local users engaged around the world. jon: bloomberg does a great job of modeling out subscriber numbers for the next five or six years. for those who have put those long-term targets out there, disney is alongside netflix the name that is expected to see continued growth. the pace of growth we can debate. i wonder on the one hand, the competition hurts a company like netflix. those other players having to keep up with disney and netflix is going to be an interesting trend to watch when it comes to different opinions on these stocks. >> when you look at what

disney's peers are, you're looking at viacom, discovery, comcast. what's interesting about this is 80 a stocks have been underperforming here to date. disney also tends to be roped in with that major tech trade is a big tech company in some ways simply because it has both that reopening exposure with 30% parks revenue as well as the disney plus subscriber and the major investment that they made in their. -- in there. jon: thanks a lot. great perspective. jason, thank you well. we will be watching disney's numbers when they cross later today. sure to watch bloomberg's interview with the disney ceo coming up on bloomberg.

the bank of canada governor is now weighing in on the bridge blockade currently playing out at the border between canada and the united states. we will tell you what he had to say next. this is bloomberg. ♪

jon: this is bloomberg markets. i'm jon erlichman along with matt miller. we were watching the bridge blockade at the canada u.s. border. the bank of canada governor weighing in on that, saying it could certainly have an impact on supply chains and the economy. bloomberg's brian platt has been covering the blockade and to have the central banker talking about the potential economic impact i would say obviously means this is a story that everybody's going to continue to be watching on bay street and

across global markets i would imagine. >> ground zero of the protest is still in the capital city of ottawa where i am right now. hundreds of semitrucks still blockading basically all of central ottawa. it has been a crisis here for about two weeks. pressure is really escalating because there are parallel protests of sympathizers with the convoy. they were at a border crossing in alberta. now they are blocking the ambassador bridge which you get the attention of everybody when you do that. the single most important piece of infrastructure between the two countries. everyone is talking about it now. matt: i desperately want a dodge challenger setback wide-body. they are made in ontario. are they going to be able to get

those through? is there another way across the tunnel? what's happening? >> the tunnel can't be used for commercial traffic from what i understand. there is another bridge connecting michigan and sarnia ontario. that's going to get overloaded pretty quickly. the investor bridge is absolutely crucial especially for the auto industry and there's already reports of delays for parts suppliers. the federal government says they are working on ultimately the police are going to have to do something about it if the protesters will leave on their own. matt: that is usually what happens in cases of civil disobedience. for jon erlichman, i'm matt miller. ♪

>> the most crucial moments in the trading day. this is bloomberg markets the

close with caroline hyde, romaine bostick and taylor riggs. ♪ caroline: it is 2:00 p.m. in new york and 7:00 p.m. in london. i'm caroline hyde. romaine bostick and taylor riggs with some breaking news. we have a new head of the boston fed. michigan provost susan collins is going to be president as of july 1. we saw eric rosengren retire from the fed in september. romaine: susan collins will be the first black woman to head a fed bank. tell us who susan collins is. >> she's a