>> i think the equity market is a little bit of reprieve here. >> are called this year has always been more subdued market returns. >> in the u.s., standup, take about. >> the opportunity for this year will be more outside the u.s. >> i don't know that anyone prospers in an inflationary environment. >> this is "bloomberg surveillance" with tom keene, lisa ramos, and jonathan ferro. tom: most interesting and truly

historic friday. we are thrilled gina martin adams with equity perspective in four lisa abramowicz. what we have heard this morning has truly been historic. i'm going to go right away to the strategist at bank of america, mark cabana. jonathan: looking for seven hikes this year, 50 basis points possible in march. it is the balance sheet reduction, one trillion this year, one trillion year. 3:00 matters to them because that is when the new york fed puts out there monthly purchase schedule. some people think they should end it now. for some people a little later. tom: back this morning with craig torres, decades of work monitoring the fed. makes it clear this is a fed that does not want to get out in front of the calendar. jonathan: this is a fed that is

so far behind. the facts on the ground and where they are, miles apart. the optics are almost embarrassing now. inflation is 7.5, and they are still doing qe. that makes sense to nobody. tom: we are going to do this at 8:00 a.m. with gina martin adams. we will turn to the equity market. what is important is what has not occurred. equities have not cratered. why? gina: part of it is the vicious repricing in the bond market is starting to be priced in the equity market. the equity market has repriced for that short-term interest rate to move higher. considering earnings growth is near 30%, we are getting some boost from earnings growth to offset that expectation for short-term interest rates. the problem going forward is that balance sheet adjusted. the fed has given little guidance as to how much balance

sheet adjustment we can anticipate. the rumors are swirling. you have a lot of bank forecasts for some severe balance sheet change over the next couple years. the fed has not given us a lot. tom: one question i think is so important. this is an equity market that is recalibrating. what are people doing with their money? gina: a lot of it is rotation within the equity market. you are seeing significantly better performance overseas relative to the u.s., better performance for shorter duration equities relative to longer duration. significant flight out of technology and mega cap tech and into financials as a rates play. the macro is driving trends in the equity market. earnings growth is having an impact on equities. equities tended to rise during earnings season at double the

average pace overall on a weekly basis during earnings. that earnings support has been there. earnings season is ending. we have got to focus on the fed. jonathan: the fed is in the driving seat. futures down 0.25% on the s&p, recovering from session lows. two-year yields come in down a basis point to 1.57. if you have been out of the office, 1.5 seven is the yield on tuesday, not tens. tens north of 2%. they come in a couple basis points. euro-dollar told 1.1405. can you get to march 16? tom: you cannot. that is the key question. what we have heard from every guest, you do not just float to march 16. every day is going to matter. at 10:00 a.m. this morning we have got michigan. brent crude 93 dollars a barrel.

jonathan: 91 on dubya ti. should we get to emily roland? tom: bring in emily. jonathan: i just wondered for you, and jean is going to have questions, when the curve starts to flatten and the heavy lifting is picked up by the two-year, how does an equity market perform? emily: when we typically see periods of yield curve inversion, it typically reflects recession coming. there are a lot of variations around that. we have seen as little as two months. you have some time, and ultimately the russia russian after that. we have yield curve inversion, equity market peak, and then recession. there is a lot of dynamics under the hood. it makes sense to start repositioning portfolios. tom: whether it is a new john

hancock in boston or the old john hancock in boston, the answer is curve in version a frightening thing. we have had guests saying curve flattening, not inversion could be constructed. do you buy the idea that if we manage down to a flat curve with all this original stuff we are doing that we could survive with stability? emily: i don't understand that amidst all the guests this morning i have heard them talking about seven rate hikes this year. if you do the math on the yield curve, we have been flattening by about 10 basis per month since march of last year. we are around 50 basis points now, 47 this morning. things have happened quickly. we are looking at an inverted yield curve by the end of the year. the fed can only raise rates two times, which i know is a

dangerous statement, before risking yield curve inversion. we think the fed comes into this year like a hawk and leaves like a dove. we see inflation coming off the blow. it is elevated now. we have got to bring it back to those base effect. february last year, cpi was 1.7%. march was the first time we saw cpi over 2%. those base affects are going to start going from your best friend to your worst enemy. we see a decelerating growth environment into the back half of 2022. we think the fed is going to have the ability. it is going to be hard to pump the brakes without slamming on the pedal as they try to make this rotation. gina: give us some insights as to what your clients are doing. are you seeing evidence of panic in the client base when talking about equity investment?

are they rotating within the equity market? how are they moving their money in anticipation of the fed landscape? emily: they are definitely a little calmer after the last two free weeks. what we have been saying to clients is the economy is strong. leading indicators are still positive on a year-over-year basis. we look at earnings growth. you talked about that this morning. we are not going to have a earnings nirvana like we saw in 2021. we are looking at 8% to 9% earnings growth for the s&p 500 this year. credit spread, they are not signaling a lot of distress. we are 335 basis points in terms of high-yield credit. they are not signaling significant distress. we have told our clients you want to think about positioning

for these midcycle dynamics. we are not so far into the cycle that we want to get overly defensive yet. we want to look for a combination of value and quality, so we are starting to rotate towards companies that have good return on equities, earnings stability, ability to grow as the economic backdrop decelerates. that brings quality growth. we like the technology sector, munication services. we are paring that with industrials that can do well if the economy decelerates and do not need higher rates to show market leadership. jonathan: emily, don't be a stranger. thank you. speaking of growth, let's talk about this. tom keene, the size of the fed balance sheet. we have inflation in america at 7.5%. we have not been here for 40 years. keeps climbing. the balance sheet keeps climbing. they are still dealing -- still

doing qe. jonathan: everybody within the bloomberg world uses a code we have for this balance sheet. what i would say behaviorally is there has been experiments along the way of tweaking the balance sheet. they have not been successful. i go to the calendar item this afternoon is cover for a chairman to begin to adjust. a lot of people inside and outside bloomberg and most of it off the record say it is not quick to happen. jonathan: no one wants my opinion on this. bank of america has given theirs. they say focus on 3:00 p.m. "we do not expect an intermeeting hike. attention will be on 3:00 p.m. the fed purchased schedule." let's see.

we can go back to that chart and stare at it. this is insane. we have inflation where it is. that chart keeps going up. for another month it will keep going up if they do not do something about it. gina: this is the biggest mess i have seen at the fed in a long time in january not addressing the balance sheet in the future of the balance sheet. it created incredible volatility in the equity market and bond market. until we get guidance from the fed on the balance sheet, it is going to be a source of volatility. tom: once a year, i where this bowtie for douglas cap. it is birthday boy bowtie. i where my bowtie for the great yankees. we send red sox greetings to mr. kass. jonathan: my birthday wishes are more sincere. guy: that is a tricky relationship.

it is complicated. jonathan: tom keene, gina martin adams, jonathan ferro. futures down 0.1% on the nasdaq. from new york, this is bloomberg. ♪ ♪ >> traders are betting the fed will raise interest rates by 1.75 -- by 175 basis points by the end of the year. inflation at its highest pace in four decades. the fed set to raise rates seven times this year, up from the five hikes they expected earlier. in the u k, the economy expanded by the most since world war ii. gdp was up 7.5%. that is despite shrinking 0.2% in december because of the omicron outbreak. more fallout from that protest

blocking truck traffic into detroit from canada. at least six auto factories near the border have slashed production. president biden -- afghan central bank assets frozen in the u.s.. according to the associated press, he will issue an executive order that 3.5 billion be used to fund humanitarian relief in afghanistan. global news 24 hours a day, on air and bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i am ritika gupta. this is bloomberg. ♪ this is bloomberg. ♪

>> getting rates up to something like 100 basis points relatively quickly makes a lot of sense. >> the fed should undertake a 50 basis point hike in march. >> if they make the decision to end taper early now, they are probably going to tell us soon, within the next couple hours. we would be surprised if they wait until 3:00. jonathan: that was citigroup for 50 basis points for march, deutsche bank for 50 basis point for march, and bank of america for maybe 50 basis points for march. seven hikes, monster balance sheet reduction. look for that announcement 3:00 p.m. eastern from the new york fed when they come out with their monthly purchased schedule.

look for that later this afternoon. citi will be looking for the same thing. tom: thanks to all of our team feeding this research. my correct, seth carpenter scheduled to be with us? in about 10 minutes, that will be a good conversation. we are hugely advantaged on this friday. this was not expected. michael pyle will join us now. he is chief economic advisor to the vice president. this is mike pyle, who took all the heritage of dartmouth economics, even the modern blanchflower economic babble and brought it into a sterling record at dartmouth economics, including winning the rockefeller award, onto blackrock and now with the vice president. mike pyle, thrilled to have you with us. i'm going to go where michael mckee is, where the washington

post is, there has got to be talk of price controls for this rampant inflation. are you talking price controls with the vice president? are you talking price controls with the white house? mike: thanks for having me, tom. i would say the president and vice president have a game plan that we are executing around the short-term and long-term to expand the productive potential of the economy. in the short-term, that means on snarling our -- means unsnarling our supply chain, getting more commercial driver's licenses out the door, getting truckers on the road. we are focused on things like semiconductors and getting investors they are to build our productive capacity. that is what we are focused on, building that productive capacity. tom: that can be the plans under

control. if there is lack of control due to month after month of high-end inflation, rampant inflation from the financial times, what this comes down to is due price controls work? in your stunning academic career at dartmouth, did you study that price controls can work? mike: i would say our job is to use the tools we have. we think the tools go to expanding the productive potential of supply and capacity in the economy in the short term and medium-term. if you look down constitution avenue, the federal reserve have principal responsibility for maintaining full employment, stable prices. we are looking to give them the space they need to take that principal responsibility. our job is to use the tools we have. we think we are doing that around supply chains, asking on

the investments to give this economy room to run. that is what we are focused on. jonathan: what do you say to people that say you ran things too hot? talk about the federal reserve and the lack of response, but the argument that you ran things too hot, that the package you passed when you took the white house was too big for this economy. here we are at 7.5%. do you have an argument for that? mike: one, let's take a step back. this is a historic recovery that is ongoing, the fastest gdp growth in 40 years, and unemployment rate down to 4%, the fastest it has dropped on record. 6.6 million jobs created last year. that is a historic recovery. obviously, we are focused on price pressures in the way they

pinch working families. we would observe this is a global phenomenon. this is traceable to the pandemic. we have seen record inflation in the u.k. and canada, the highest inflation in europe in 20 years. this is a global phenomenon. we want to build on the successes we have had around the recovery. we are focused with the tools we have to bring price pressure under control. jonathan: to a certain extent people would argue against appeared president lagarde said this -- she thinks it is a different economy in europe compared to the u.s. you rattled through those numbers. we do that as well. there are some great numbers out there. the problem you have got at the moment is you know the sentiment numbers don't echo it. people don't feel good. in the polls, it has been a

difficult time for the price -- the vice president. is the calendar on your side when you look at inflation and the hope that it decelerates? mike: i am the economics guide. i will discuss the economics. i think you heard from the president yesterday in his statement after the cpi released something we have been saying for a while. when you look at the vast majority of forecasters, whether it is the fed or private sector, they see inflation decelerating over the course of 2022. we see the labor market remaining strong. as we go through 2022, we are going to see ongoing strength in the labor market, inflation decelerate. i think you saw the glimmers of that in the cpi print and jobs print last week when we saw wages go up by 0.7 month by month.

it was indicative of real wage growth. as we move through the year, that is going to improve as wages stay strong. jonathan: thank you. it is good to catch up. chief economic advisor to kamala harris. one of the smartest guys in the administration. it is a difficult moment for this white house. tom: there is any number of things we can talk about. what i heard was the messaging of space and independence for the fed, and the fed has to take that opportunity for that support, which maybe they did not get with the past administration, to verbally state the path to march 16 or get in front of the debate and say this is where we are. jonathan: you've got the economic issue and the political problem. the economic argument that ultimately you will get some deceleration this year, and that will open the door for a more gradual fed. the political problem is we

spent last year hearing it was temporary. it did not. tom: why can't they say we are going to raise once or twice, and we are going to stop to adapt? jonathan: some people are making that argument. we will get to the view of morgan stanley, seth carpenter, next. this is bloomberg. ♪ s is bloomberg. ♪

yep, it's go time on the most reliable network. you get unlimited for just $30 bucks. nice! but mine has 5g included. yep, even these guys get it. and the icing on the cake? saving up to $400 bucks?

exactly! xfinity mobile. it's wireless that does it all and saves a lot. get the new samsung galaxy s22 series on xfinity mobile. and right now, save big with up to $750 off a new samsung device. switch today.

>> from the world of politics to the world of business, balance of power with david westin.

news and insight about politics and power players weekdays. this is bloomberg. jonathan: what a moment for this economy and the fed response. the next scheduled meeting march 16. tom keene, gina martin adams, jonathan ferro. on the nasdaq down .04%. about to turn positive. backing away from session highs on the two year yield. the biggest move on the two year back to 2009. yields back into 1.54, on 10, 1.99. tom: the message following this historic day -- in from 839 shock last night. that is a little steeper yield curve. these are micro-moves but

important for global wall street. let's get to it. seth carpenter is chief global economist at morgan stanley. he will not front us on what ellen zentner is saying about the fed. we can fall back to seth carpenter's 15 years at the federal reserve system. how does a chairman find a consensus? seth: in these current circumstances, jay powell will have to forge that consensus himself. remember at the december meeting he was recounting out over the course of a weekend he changed his mind over what the reaction function was going to be, brought the whole committee along with him. the same circumstances be along with him. i expect them to be dragging the consent just. tom: is he advantaged because he is not a fancy economist like

you, is he advantaged because he is outside the phd of richard clarida to or lael brainard or all of that? seth: fancy pants is a great word. since we are on zoom i can say i'm wearing jeans, not fancy pants. i remember when jay powell was dominated to be chair, that was one of the conversations, he is not a real economist. he is very smart and very good at lateral thinking. he is not beholden to his own published research records. he can pick and choose from the best research and ignore the parts he does not think fits. gina: i would love to talk more about your global outlook. clearly the u.s. central bank is going to embark on a severe tightening phase over the next year herself. other central banks -- the next year or so. others have started tightening and others have started and a --

where the best opportunities for risk assets and where they getting worse? seth: this cycle has been extraordinary for risk assets. one of the things when the fed was starting to taper we said we did not see a repeat of the taper tantrum. many of the central banks that already started raising rates and started tightening. the pipit to -- the pivot to dm was short, now the ecb has had a change in tone. in that regard it is a fascinating time. to the contrary is china. we cannot talk about the global economy without talking about china and the u.s. and the rest of the world in response. the pboc is in an easing stance right now. the chinese economy slowed fairly aggressively. they have a target for at least 5% growth this year. our view, our china economist is

more constructive than markets because we think it will be a policy response. the more slowing you see the more the policy response will follow. we are already seeing the data for other measures we are turning the corner. gina: you see anything in currencies we should be on guard for? the dollar was extremely strong coming into this year. where are you seeing wheat does emerge in the global currency markets and subsequently where is strength emerging? seth: i am lucky to work with great effect strategist at morgan stanley. one key point that when you think about make sense, typically in a hiking cycle the dollar will depreciate before rates go up, and after you start to raise rates you see them peek and it comes off. this time is different because of the different synchronization. we are still looking for not run away dollar for as long as the eye can see.

tom: let's go back to alan blinder 101. what is the responsiveness of gdp growth to all of this ballet at the fed? are they inextricably linked that if the fed acts, growth slows? seth: they are tightly linked but there also many other factors. we'd a great deal of fiscal support. that is coming off this year. i do not think it will be the textbook fiscal cliff scenario where you look at the deficit, but no two ways about it. we will see some slowing. in addition, prices are rising, consumers will shift away towards services. until we are well to the point where omicron is in the review mirror come you may meet -- you may see consumer spending. the consumer looks to be in good shape.

less fiscal policy should slow things. over the next several quarters as the fed goes from being accommodative to restrictive we should see them slowing. tom: ellen zentner lead with the idea of inflation rolling over. do you find value in a guesstimate of united states inflation at year end 2022, or are things so messed up you must go out into 2023 to 2024 to find any sort of terminal value analysis? seth: i think this is one of the very tricky situations where things are not going to be smooth, not going in a straight line. we are looking for the peak in the month-to-month prints with the february cpi we will get in march. then depending on if you're looking on the month or month or the 12 month change, the latter being very slow moving, it matters a lot. i think where we are at the end of the year will matter a lot.

the fed will likely frontload hiking. how much they continue with that will depend heavily on how those month-to-month prints looking q4 this year. gina: i think this inflation story is very intriguing. what we have seen over the course of last year is inflation pressure globally. a year ago we were talking about inflation started to spike in the u.s. we are now talking about many economies experiencing abnormally fast inflation. you see inflation peaking sequentially throughout the rest of the developed world over the course of 2022 or do we need to be on guard for inflation continuing to accelerate in other economies while at ptr? seth: i think there is a real risk of continuous acceleration, especially if you are measuring 12 months change. here a key difference is europe versus the united states. oil prices have risen and kept rising. where the peak will be is hard

to know. if the level gets reached and stays there, over time inflationary impulse will fade. a key question is europe is not dependent on oil but also natural gas. we have there is geopolitical tensions with those markets. as a result europe will be that much more sensitive to the commodity markets, and then for the u.k. inflation will be that much more tricky because the labor market is constrained, not just because of issues from covid but also if they find their new equilibrium in a post-brexit world. gina: might we be underappreciated and the extent to which the u.k. and the ecb could be forced into tightening? there mandate is notably different than the fed. could we beat under appreciating potential central bank tightening in those developed markets? seth: that is a very real concern. the markets are reasonably

frontloaded in their expectations for central bank hiking in the bank of england and ecb. we provided our forecast for the ecb. there the question is going to be how quickly do they end their purchase program. inflation will be higher than target and could be more persistent. a question is why you still buying assets in the market. we think they're going to accelerate the end of that program. we also think the rates from the ecb from negative policy rates to zero will be played out in a quick manner. the trick for the ecb will be what happens once you get to zero. how much appetite to they have going further into positive territory. jonathan: awesome to work through this with you. seth carpenter of morgan stanley. consensus seems to be frontloaded, whether it is 50 or march or 25, frontloading the hikes seems to be the consensus. gina: very consistent with a cash up ideology.

frontload to catch up. the assumption is if you frontload you may have an impact on growth but we do not know. this has been a very different cycle, making these presumptions at a modest increase in interest rates at this stage will have an impact on both is a pretty big presumption considering how fast and robust this growth recovery has been. jonathan: equities in positive territory on the s&p, on the nasdaq as two year yields back away. gina: somebody told you this is a buyable opportunity. jonathan: i think her name was gina. [laughter] jonathan: are you confident this sticks? gina: i think it will be a rocky day but the movement yesterday was fairly anomalous. tom: gina, it is tv, we just note want to know what you think

to get the 4:00. that is long term. gina: there you go. i think you buy at the open. tom: jonathan, you will do your thing with your multiple other properties. the real yield is an important set of conversations. jonathan: before we get there we have to talk to the man himself. he started warning about it in 2021 and here we are with cpi 7.5%. we speak to mohamed el-erian in about 20 minutes. from new york with tom keene, i am jonathan ferro, do special thanks to gma. gina: my pleasure. jonathan: gina martin adams in the seat of bramo. she will be back monday, or is she skiing monday? i will text her and find out. that is the extent of our planning here. from new york, this is

bloomberg. ritika: federal reserve officials are in no rush to raise interest rates before their scheduled policy meeting next month. a .5% move in march is not likely despite a bigger than expected jump in inflation that led to speculation about those options. an emergency increase could signal panic and add to the criticism the fed is too far behind in fighting inflation. hong kong has reported another record day of coronavirus cases. or than 1300 infections along with 1500 per luminary positive cases. the outbreak is trading hong kong's health care resources and putting more pressure on the government push for covid zero. two u.s. senator say the central intelligence agency has been secretly collecting data on american citizens. senator ron wyden and martha heinrich say the activity did not have the safeguards of congressional oversight. the cia has released some information on the program and

defended it as lawful. members of the billionaire family that owns purdue pharma is trying to get the opioid segment on track. they are considering whether to add $1 billion to the agreement in an effort to win over holdouts. that would bring the family contribution to $5.3 billion. a judge rejected an earlier version. global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i am ritika gupta. this is bloomberg. ♪

pres. biden: should leave now.

we are dealing with the -- american citizens should leave now. we are dealing with one of the largest armies in the world. that is a world war i americans and russians start shooting at each other. tom: the president of the united states delicately driving the forward on what we have seen of last couple of days, which is a significant step up in diplomacy including comments yesterday off of the united kingdom. we are thrilled you are with us. we will focus on inflation, the raging fed dynamic, there are other stories as well. gina martin adams in for lisa abramowicz and we are thrilled to bring you in studio for the first time since nixon was president, not that far back, tina fordham joins us, head of global political strategy at haven hearst. tina: such a pressure to be back. tom: these are delicate times, russia has conveyed a message

there are no plan, there is this , there are talks to the north of belarus, of the northeast of kyiv in the southern parts of the russian federation. you have the purge to go the other way and look south to the naval reality of the black sea. into this weekend, what we need to know about russia and ukraine , ukraine and russia in the black sea? tina: it is a very important conversation and i've been talking to investors in new york and also london where i am based. the memo is becoming more clear on what might happen next. new military exercises have started. they are meant to last for 10 days. russia has been careful to control the narrative and always positioned its moves as within its power as a sovereign nation.

the troops are stationed on the russian side of the ukrainian border and in belarus. to block ukraine's black sea access would be regarded as an act of war. we had strong comments from president biden warning u.s. citizens to leave ukraine. tensions will ratchet up over the remaining eight days of the so-called military exercises. tom: there are some anyways go, but in the limited amount of time, i would think gina martin adams wants to get it -- once to get in as well -- do we have the capability of showing the flag in the black sea in support of ukraine? tina: that is one question. another question is whether it would be a good idea. in his nato capacity, james would not make these comments. you're starting to hear more people articulating putin's

view that nato's eastern expansion is aggressive and provocative. what putin is doing is testing the postwar settlement that says he should be able to operate in his neighborhood. russia believes in sovereignty except when it comes to ukraine. gina: the natural tendency of the market is to extrapolate any behavior and look for next steps. my question is what would be next, presuming we do ultimately get an invasion of ukraine, what will russia do to follow that up? is that the end. it's ukraine the grand prize or is there something bigger we should be worried about? tina: i would not be so quick to assume we are going to see an invasion of ukraine. what we can say is all the preparations are in place for a regional war in ukraine.

that is not the same thing as saying it is inevitable. i take issue somewhat with those suggesting this is going to happen. that is because i think putin has managed to achieve quite a bit. we just talked about how he has more mind share for the russian physicians -- for the russian position it should be able to do what it wants and nato should be clear about its position. de-escalation on russia's terms is not impossible. tom: i want to talk about what we talked to the wonderful angela stanek, she moved on to a larger global analysis. i will go to yalta, this was a few years ago, the bottom side of ukraine, identified with joseph stalin, fdr, and winston

churchill. the professor makes clear we are leading to some new structure of a tri-polar world of the united states, of putin, and of an ascendant china. explain the delicacies of the new russia-china relationship. tina: huge respect to angela stent. i share that analysis. we have not been in a bipolar world for a long time. i am not sure i am ready to think about a tripolar world. russia is a spoiler. it has nuclear weapons capabilities, a u.n. security council seat. it is a powerful diminishing state. it is a disruptor. china and the u.s. is another question. what has changed since the statement at the olympics is a more overt kind of cooperation

between russia and china. that is important for the future of the monetary system, created parallel institutions. it is not right to focus merely on the military manifestation of this power relationship. china is speaking up, saying russia should be allowed to do what it wants. it relates to taiwan as well. tom: we were scheduled for three hour conversation but i am told we cannot continue the conversation. thank you so much for coming in. please come again. we look forward to seeing you in our london studio. tina fordham, i cannot say enough about their perspective she has given us. gina, final point to you. did i miss my entry point on the equity markets? gina: you might have missed it in january but we will have a few more opportunities. we will have plenty of

opportunities to add. tom: in a stunning overnight we need to say thanks to our bloomberg's economic team. craig torres with the definitive essay on what the fed is doing. interesting to see how that plays through the day and to all of our surveillance teams to the conversations we have had on this historic day. gina, it does devolve back to the stock market. what's of the stock market -- what should the stock market listen to from chairman powell? gina: the most important thing the stock market will be looking for is some kind of guidance on the balance sheet. the stock market has a long way to pricing in short-term interest rates with the vicious correction we saw in january. what the stock market is unprepared for is where the balance sheet is headed. that has historically been really tricky for the stock market to contend with, the loss of liquidity as the balance

sheets contracts. it was difficult last cycle and we should expect the same. tom: stay with us through the day on bloomberg radio and bloomberg television. an important conversation with paul krugman, look for that in the 12:00 hour. this is bloomberg. ♪

jonathan: given the week we have had in the treasury market would you guess the equity market was up on the week? futures up .1%.

good morning to you all. "the countdown to the open" starts now. >> everything you need to get set for the start of u.s. trading. this is "bloomberg: the open" with jonathan ferro. jonathan: we begin with the big issue. big forecasts. >> this is the scenario the fed was concerned about. >> this is what you did not want to see. >> what is the fed going to do from here? >> weather 7.3% or 7.5%, they will go and go hard. >> they have been debating whether they will do it in measured 25 basis point increments. >> i would like them to just get on with it. let's