>> u.s. is starting to see expectations around longer-term expectations of inflation starting to rise at uncomfortable levels. >> we just don't know how much of this will self-correct. >> the big push and pull is going to be a battle between inflation and the fed response to it. >> you don't want to be tightening so fast that you choke off the recovery. >> the fear is that the fed is going to overcorrect and pull back, and that is exactly what the fed should not do. >> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. jonathan: we are moving to belgium. from new york city, for our audience worldwide, good morning. alongside tom keene and lisa abramowicz, i'm jonathan ferro. tk, did you see the news? belgium giving workers the option of a four-day workweek. still got to work your hours, but you do it over four instead

of five, and you can turn off your so-called work devises without fear of reprisal and ignore messages from work. doesn't that sound brilliant? tom: i like it. i think it can be a format we can work with. i think maria tadeo is ace on this. tom: i imagine she gets -- jonathan: i imagine she gets relocated pretty quickly when she starts to offer four days. what do you think if the market changed to a four day week? lisa: i think a lot of people like it, but then a lot of people work a 50 day. jonathan: this market -- a fifth day. jonathan: this market unchanged. the data 90 minutes away. tom: it has been a real dearth of headlines out of ukraine today. that was certainly the mover yesterday.

i thought the press conference was extraordinary. but what we do have is a follow-on to the united kingdom stunner of higher inflation, and that is if you have higher inflation, will people buy things? retail sales coming up, important. jonathan: the data north of 5% on cpi. the bank of england meets on march 15. we are having a conversation about a 50 basis point hike may be in the u.k., if the baby -- a 50 basis point hike maybe in the u.s. as well. tom: we will address this in the hour. you've got to wait because april time, you will start to see certain things roll. what is the agony if they move up too quickly? all central bankers really want to avoid that. jonathan: we have to touch on what is happening with the geopolitical front as well. we have had the communication

out of russia. we have had the headlines that suggest they are pulling back from russia. then we have the headlines from the u.s. president, the nato secretary-general says it sounds good. we would like to see it. tom: the financial headline is life goes on as well. certainly that was the tone of mr. putin yesterday, talking about the relationship of hydrocarbons with all of europe, and particularly with germany. we just wait for headlines. i would also suggest we wait for an interpretation of u.s. intelligence on the moment in ukraine. jonathan: let's get to the chief equity and derivatives strategist at credit suisse. should i be pricing and more rate hikes in our future? mandy: even as traders are pricing in margaret's of rate hikes for this year, they are also pricing in rate cuts further out, starting in 2024.

the curve is actually inverted with 70% probability priced in currently that the fed will have to cut rates very soon. with that tells you is that there is a real risk that the fed is about to embark on a policy mistake, meaning over tightening now and killing off economic growth and having to cut rates very quickly soon after. tom: there are, and one of them is this odd thing called skew. it has to do with the fear that is out there. when you are a feared, you hedge. what is the demand now, the appetite to hedge? mandy: interestingly, to start the year, we have not actually seen significant increase in demand in hedges. that is interesting because obviously we have a 10% pullback in the s&p in january, and

volatility really underperformed on that selloff because of this lack of hedges. part of that reason is because we think of the catalyst driving that correction. it was fear of higher rates. that is a really well anticipated catalyst. it is not really an unknown or an uncertain, unexpected risk. what we are seeing over the past couple of days is more demand for hedges on the back of the russia and ukraine news and also on the back of speculation that the fed may be hiking inter-meeting. i think that has driven a lot more volatility in recent days. tom: what is the exposure on the hedges and the entire market? what is the depths of leverage out there? mandy: i think for a lot of institutional investors, they have deleverage to quite a bit -- they have deleveraged quite a bit. the most pronounced at the sector level is for tech.

in terms of the protection by and we are seeing, typically a protection buying we are seeing its positioning for a more modest pullback from here. i would say given what happened in january, given the deleveraging we have already seen, the protection buying we are seeing right now is more modest. it is not as bearish as some might think. lisa: a lot of people will think of me as someone who comes up with a negative scenario no matter what happens, but there is that kind of basis to the hedges, people hedging for a policy error on both sides, not only moving too fast, but not moving quickly enough at a time when inflation is cramping demand where there is the fear that perhaps we will see some of that in the retail sales at 8:30. what is your view on why people are hedging on how you can determine this from the type of hedge? mandy: on the risk of the fed being the hind the curve -- being behind the curve, i would

say that is a risk that is being overblown. we are seeing high inflation right now, but the important thing to emphasize is that long-term inflation expectation, looking for example at the five-year-five-year forward breakeven, they remain remarkable he well anchored. as long as that remains the case, i think that has more breathing room. but in terms of what people are hedging, looking at hedges in tech has been very popular, and the second that has been popular is looking at cross asset hedges even some of the moves in equities, for example in fixed income etf's, precious metals like gold have been another popular one. lisa: you seen a lot of investors -- have you seen a lot of investors shift around their hedges rather than selling some of those holdings? i thing about tech stocks. for a long time, people were worried about getting rid of them for fear of not being able to buy them back later.

mandy: i don't think that fear is as dominant this time regarding tech. in terms of how people are hedging and what they are doing particularly on inflation, it is notable that what we have seen is that high inflation regimes, the correlation between equities and bonds down. it is obviously not good if you are a multi-asset portfolio, a traditional 60/40 portfolio because your bonds are no longer diversifying your equity risk. we have seen from a lot of institutional investors is a look at more equity specific hedges, less reliant on fixed income to be are hedge. the second thing is looking at commodities, adding a commodities allocation because obviously commodities are a big driver of the current inflation we are seeing, so looking at either adding a location the underlying commodity or increasing upset exposure to some of the commodity sensitive sectors, for example energy.

tom: -- jonathan: great to catch up. thank you very much. the data at 8:30 a.m. eastern time, u.s. retail sales, then the federal reserve minutes from the last meeting. you think you have gauged a federal reserve meeting, and then you give the minutes, and it gives a platform to a different set of voices. what was interesting about the minutes the last time around, the fed minutes argie repeated what we already heard in the news conference, but we traded them in a very different way. lisa: today i think the focus is very much on the balance sheet. we have not heard a real sense of what they are going to do, how quickly they are going to roll it down, and any commentary on that has a serious ability to move markets. people are watching this as you have esther george and other fed officials saying they want to steepen the yield curve or they might look at the balance sheet as a way to steepen the curve and allow longer-term yields to rise a little bit more. how much could that disrupt markets with yields already at the highest levels going back to 2019? jonathan: who is it a platform for?

take your pick. tom: they are all out there talking for you know how i feel on this. there's over communication. the minutes, i get some translation there. some, several, a few, and the rest of it. but there is too much over communication. i will say this. chairman has got to step in. jonathan: exactly. is there over communication, or you just not like what you are hearing at the moment? because there is a difference. tom: i think the chairman has got to come in and take control. that is what greenspan did. jonathan: you would like to see a scheduled speech before the next meeting. tom: i would like to see clarity. i think there's always an advantage for it chairman or vice chairman with clarity. the blur that michael mckee has to analyze is ridiculous. jonathan: the issue, the vice chair position at the moment, vice chair clara is gone. -- vice chair clarida is gone. we don't really have one. lisa: i feel like this is a

relationship issue. tom is saying he doesn't like over communication. just give the doctrine. jonathan: he think this carries over to his personal life. lisa: i think it is a very different style of socio-analogy and interaction. jonathan: i think what tom is actually getting at here, and tom is not going to say -- [laughter] lisa: tom is not saying anything. jonathan: the communication is coming from a handful of individuals. what we would like to hear from is from the core of the fed. presidents -- if president dudley is saying we will let the chairman lead us, let's hear from the chairman. pretty quiet right now. if they don't know what they are going to do on march 16, don't using they should know right now? lisa: i don't know. i actually don't know. i thing it is a very tricky time right now with the data and the movement in markets. tom: should i send a dozen roses to chairman powell? would that work? [laughter] jonathan: i'm sure that would cheer him up. futures down 0.1%.

from new york city, on tv and radio, this is bloomberg. ♪ ritika: keep you up-to-date with news from around the world. with the first word, i'm ritika gupta. more troops are returning to their bases, but western officials remain kosice -- remain cautious. the natives equity general says there's no proof of pull back russia's part. scow has rejected warnings that it is planning -- moscow has rejected warnings that it is planning to invade ukraine. adding pressure on the bank coming in for a supersized rate increase next month. and will price growth in january rose to 5.5%, a new 30 year high. it is a standoff in the senate banking committee. republicans blocked votes on president biden's five picks for the federal reserve. the dispute has to do with only one of the nominees, sarah blumer asking.

she is -- sarah blumer asking -- sarah bloom raskin. she is the nominee for the vice chair of supervision. sandbagging chair -- senate banking chair sherrod brown says he will reschedule the vote. the international olympic committee estimates about 600 million people, around half the chinese population, have seen the olympics on tv. in the u.s., nbc may end up with the least watched olympics in the event's history, nearly half of what it was four years ago. global news 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i'm ritika gupta. this is bloomberg. ♪

♪ >> so far we have not seen any de-escalation on the ground. on the contrary, it appears that russia continues a military buildup. we want to sit down and discuss with them, but at the same time, we are prepared for the worst. jonathan: that was the nato secretary-general. team coverage coming up. if you could hear the commercial break, tadeo, amh, tom keene trying to speak french for about two minutes. nice work, tom.

futures down 0.1% on the s&p. can you imagine how much an advertiser would pay for that spot? 0.7% on tens. tom: enough with the french. we will leave it there. annmarie hordern with us washington and maria tadeo in brussels. very symbolically, maria tadeo today at the nato headquarters, placed on the airfields of belgium of world war i and world war ii, when germany occupied to them. that is the back story to all of the emotions of nato and the mixed conundrum and the rest of it as well. what headlines are you looking for today in what has so far been a quiet wednesday? maria: really, the focus in nato today, defense ministers from all of the nato countries are

meeting behind me. they say they want to see real proof that russia is pulling back troopthey say russia has ds many times. i had one official from estonia telling me i would never believe a video filmed, recorded, and released i the russians. i want to see our intel confirm they are putting back the troops. this is perhaps the text technologies -- perhaps the technicalities of war, but they say it is one thing to pullback the men, but you have to pullback the equipment, too. they really want to see the proof here. tom: explain the nato analysis of the fragility's of the black sea and to the north. how does nato feel that part of the study in intelligence is going? maria: for starters, we are now seeing romania joining in this nato alliance, so you are seeing

nato in many ways expanding in the east. there's real buildup not just in the black sea, but in the baltics, close to russia. in terms of what this conversation is, i would say the focus is not so much on the black sea at this point, but really on eastern ukraine. many continued to say minsk is the only way forward. if we want a diplomatic way out of this, and we believe russia is acting in good faith and putting back troops, we have to go back to the normandy format and the minsk agreement. as you know, this is incredible he problematic because the way that ukraine looks at the minsk agreement is not the way the russians see it, and how the russian government interprets it is something the ukraine government cannot accept. lisa: we have been talking about how oil plays into this equation. yesterday, president biden saying nord stream 2 will not happen if russia does invade ukraine. do we have more of a direct sense of what the german position on this is, given the fact that they have been a little less vocal about it?

annmarie: i think in public, they have been a little more elusive as to what they would do with nord stream 2, this private enterprise project that germany also needs, and that the spd, the party in which olaf scholz represents, totally supports more integration and communication and business ties with russia. but behind closed doors, when olaf scholz was in washington, he met with senators. senator mitch mcconnell had come out and said that they basically had assurances that nord stream 2 would be off the chopping block. president putin spoke about energy dependence yesterday, standing alongside olaf scholz, and he made a point to say the economic ties between russia and germany are at an intensive point at the moment. lisa: how much of a signal do you get from the fact that we hear all of the tensions from the u.s. government, from france, from germany, not from ukraine that much? that on the ground, people are

not that worried about russia invading? what do you make of that? maria: today we should note that it is a public holiday in ukraine, what they call the national unity day. a lot of this was done by president zelensky to rally the ukrainian people, and we should note this is a very real life-and-death scenario for them, and they have been terrorized on a daily basis about this attack happening. ukrainians say we should not panic, otherwise this could turn into real social chaos. we see the economic than image -- the economic damage already happening. all of this is happening at a time when the people of ukraine are very concerned, but trying to stay calm. you speak to european officials, they say that perhaps it is a good idea to tone down the language, especially coming from the u.s., which makes it very uncertain and makes it almost way to panicky for the europeans.

the french are saying we are not pulling anyone out. we don't see the situation escalating. the troops have been stationed there for months, so technically on the ground, nothing has actually changed. jonathan: on a lighter note, you are based in brussels. are you negotiating a four-day workweek? [laughter] maria: can i? [laughter] lisa: she is speechless. maria: i think team "surveillance" doesn't take four out of five. jonathan: that's what we like to hear. maria, thank you. maria tadeo out of brussels, amh downing d.c. -- amh down in d.c. this administration faced a lot of criticism for pulling out of afghanistan. from republicans on this, we have not heard many complaints at all. a little bit of unity at the moment. lisa: it is important to note that the u.s. strategy has been

very different when it comes to communication. it has been unprecedented, the volume of intelligence released in real-time time to the people. yes, this is a message and more, and this is the concern about information, but i wonder if this is the new tactic at a time when you have the nuclear threat, but on the flipside, the cyber threat and the informational battles are the real way to go. jonathan: some unity on an important issue. tom: there's the unity there, and as we've heard from guests, some of those off the record conversations, there seems to be a seachange in the reality of social media and the speed of news. separately from that is the cyberattack reality reported in the last 24 hours upon ukraine. i don't have those details in front of me, but there is some modern digital stuff going here that is away from remembrances of world war ii. jonathan: trying to stay on top of geopolitics, the foreign policy the data in america, the central bank effort.

the governor of the bank of latvia right now, and interest rate hike is quite likely this year. keep practicing. have you called maria to apologize? tom: [speaking french] [laughter] jonathan: from new york, this is bloomberg. ♪

♪ jonathan: we absolutely whipsawed by headlines over the situation in ukraine. no drama this morning, for now. on the russell, positive about 0.1%. in the bond market, twos, tens, and 30's look like this. tends just north of 2%. ticking up on 30's yesterday, 2.3498%. 1.57% on twos, through 1.60% off the back of cpi. that really hot cpi print, you can throw on top really hot ppi print and have a look ahead to retail sales about an hour from now to set the stage for the federal reserve conversation. let's set the stage for the conversation at the ecb and the boe. the bank of england, inflation hot, north of 5%. a fresh 30 year high in the

conversation around a 50 basis point rate hike. sound a little like what we are talking about the fed. at the ecb it is a little more nuanced. there's a process to go through here. we need to unwind qe and then have a little bit of a chat about an interest rate hike. that is what is happening right now. the central bank governor of france is talking about winding down qe by q3, and the central bank governor of latvia is talking about an interest rate move before year end. for the ecb, it might be one. but you've got to go back to 2011, the summer of 2011, for the last time they even made a move. the fact that we are having this conversation is a massive change. tom: i agree, this is a huge deal. central bankers are human. they get it wrong. but everyone remembers that, and it is tattooed on the mind of every banker in europe. jonathan: we have talked about

this issue before. we have gone over the history. think he knows that was a mistake. this is a different backdrop now. inflation is not a 2% or 3%, not driven by crude or energy prices. euro-dollar off the back of this story, 1.1378. let's talk about the price action and say good morning to romaine. romaine: keep an eye on chip stocks. yesterday, the philadelphia semiconductor index was up about 5.4%. it looks like some of those gains could be added today. did get analog devices earnings pretty good. they beat not only on fiscal first quarter numbers, but the guidance they gave for the fiscal second quarter also coming in well above what the street was looking for. after the bell tonight, we will get cisco earnings and applied materials earnings, which will be a nice look at the bottlenecks here and whether any of these companies are expanding passages.

and nvidia also coming up for the bell. member, this was the best performing stock in the sox last year. it has rallied about 10% over the last couple of days. higher today in the premarket by about 0.5%. keep an eye on those retail sales numbers that are going to be coming in less than an hour, we did get some earnings out on top of five -- on shop if i -- on shopify. that is what a lot of people are focused on here, not where the consumer spending is strong, but whether it is able to keep pace with other pandemic levels. macy's shares are higher on the day right now by about 3%. this is primarily on an upgrade at evercore isi. we got airbnb numbers last night. i know you have probably never stated in airbnb, but they are doing pretty well, i about 80%

growth year-over-year. tom: we rent out the place on airbnb, but we don't get a good price because it is a sixth floor walk-up. the guy below me is making the rent, and six floors, they just won't walk-up. thank you so much. we've got cyber headlines out of ukraine that can wait, to be honest. michael collins is more important. i would note that the secretary of state of the united states, mr. blinken, condemns duma resolution on eastern ukraine. jonathan: i thought you said that could wait? [laughter] tom: that is one headline. that is not on cyber. jonathan: let's read the cyber ones. they say the attack continues. the cyberattack is still ongoing. it has shut down some government websites to prevent the attack. that is the latest out of the ukraine. this was the worry of u.s. officials, if you remember. it was not just about a confrontation militarily. it was also through cyber. that seems to be taking place in

ukraine, from what we are hearing from officials there. tom: it is the tried-and-true method we have seen before, without question. we have never seen a bond market like this. michael collins runs real money at pgim fixed income and joins us this morning. what is original about this yield up and price down? michael:michael: it is a very different cycle. i had a client ask me, what does this remind you of? they all have their nuances. we have just kind of gotten through this covid pandemic, and now we are going through this huge global broadening inflation surge and a gigantic, abrupt, hawkish central bank policy response all around the world. mentions the ecb, the boe, the fed come of this intro bank. they are all in. you do have to recalibrate your ranges. coming into the year, we are

thinking one to two. maybe on the wide end of the range for fair value for 10 seemed right. i think that number is higher now, but over the long term, we are still sticking with the view that things will moderate into disarray years from now. . tom: our listeners and viewers have a real understanding of, in the equity market, when someone builds cash, 3% out to five cent -- out to 5%, do guys like you and the fixed income world build cash at a time at this? michael: we don't. we will go long duration, short duration, in and out the yield curve. if you want to take down credit risk, you will add to treasuries. we have done exactly that. we have lowered our credit risk in light of the fact that there much higher probability of a central bank policy mistake, or just a broader policy mistake. maybe a geopolitical policy mistake. because of those tail risks that

are really elevated in our mind, we have cut credit risk. one thing you do is you go into safer things. maybe higher quality bonds or treasuries. interestingly, there are a lot of interesting excess return or total return opportunities in the old-fashioned treasury market. jonathan: you were smiling because you know i am going to asks the question. every time i see yields tick higher, i think of you starting to nibble. have you been buying at the long end? what is the strategy there? michael: what we have been doing is adding to the position in the 20 year, but maintaining a big curve flatter. we have not been adding to the ration here. we have been kind of maintaining , even trimming it a little bit, in some parts of the curve, really looking for a better entry point. i don't know where this thing is going to shake out. i don't know how many times the fed is going to hike rates. i don't know when inflation is going to roll over. we are really biding our time,

waiting to see more signals that inflation is going to roll over. that is going to be a really important signal. but there's a lot of value in parts of the curve like a 20 year treasury. you can hedge with tens and 30's. i know this is inside baseball stuff. you are not taking any interest rate or curve risk, but you are adding more alpha to your portfolio. tom: we have michael collins doing the macarena on tv. in my doing it ok? jonathan: that is beautiful. can we clip that? lisa: there is so much specialness right now, i don't know where to go. jonathan: who gave him his coffee this morning? what is in that cup? [laughter] lisa: let's go back to the 20 year auction because i've got $19 billion of options i want to talk about. have you changed your view on where the end rate will be for

longer term treasuries? because you were of the view that we had already seen the peaks and that they were going to go down. now we are at 2%. how have you shifted? michael: in this world, when you are investing, just like the fed says you have to be nimble, you have to really be willing to be flexible. the biggest mistake you can make is sticking to something regardless of new information coming in. the new information is that inflation has been a lot stickier and it is actually broadening out as we sit here. the conviction we have that it is going to be 3% at the end of the year is much lower now than it was six or 12 months ago. i still think we are getting really close to the high-end of rates. 30 years, as you talk about, are in the 2.30% range, and tenure is bouncing around 2%. the two-year is still at risk,

and we are still short that part of the curve because of the fed really pulls off seven hikes this year come of the front end could still get whacked, so being in a flattened area i think -- in a flattener i think is still the right trade. i don't know where it is going to end this year. we are probably really close, but three years from now, those yields are going to be lower. that is where the value is over the long term. jonathan: are you free at 1:00 p.m. on friday, just for 25 minutes? [laughter] mike collins of pgim, coming up later this week on bloomberg "real yield" for a conversation uninterrupted on the bond market. citi put this out on the data we have seen, and this speaks to what mike collins is talking about at the front end. the ppi report and its implications for core pce are very consistent with the idea that u.s. inflation is stably running well above target and is not slowing down.

increasing our confidence that the fed will respond aggressively, including with a 50 basis point rate hike in march. that is the call from citi. tom: they are all going to vary. we are 50 minutes away from another data adjuster to all those guesstimates. jonathan: do using retail sales can change the story for the fed next month? tom: clearly the key data, but every data point now matters in this parlor game. lisa: i think it could change the conversation because right now, you got the dammed if you do, da -- if you do, damned if you don't. tom: did i dance ok? jonathan: do you want to do it again? tom: no, what is important is in the equities, you do the five ratios dupont dance. that is like on tiktok. jonathan: what is your tiktok candle?

do you want to share that with us? tom: i want to give that -- i want to keep that private. jonathan: futures down 0.3%. from new york, this was special. this is bloomberg. ♪ ritika: tipping you up to date with news from around the world come up with the first word, i'm ritika gupta. investors will get fresh clues on the federal reserve's next moves. minutes from last month's policy meeting will be released. there is speculation that the fed may act more aggressively to get the highest inflation in 40 years under control. that could include a larger than expected interest rate hike. former alaska governor sarah palin has lost her defamation case against "the new york times" for a second time. the judge said he would throw out the case anyway due to weak evidence. the case had to do with an opinion piece linking palin to a deadly shooting.

a sluggish corporate travel demand is hurting the recovery. hilton posted earnings that missed estimates, down 14% from the fourth quarter of 2019, before the pandemic. meta platforms ceo mark zuckerberg calls the employees metamates to refine found focus on the so-called metaverse. zuckerberg retained the old motto of move fast. he added several others, including build awesome things and live in the future. global news 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i'm ritika gupta. this is bloomberg. ♪

> companies are experiencing inflation, but pushing it

through their consumers, and the consumers are paying up. that is good news for margins, for earnings, and for the stock market. jonathan: that was linda duessel, federated hermes senior strategist. futures down 0.2% on the s&p. we pulled back just a little bit on the nasdaq as well, down about 0.2%. it's to get through through the next hour. 42 minutes from now, retail sales in america. later this afternoon, the federal reserve minutes. we have a bond auction in between. yields in a sickle basis point on tens. crude a little higher, up to 93.40. tom: what we are going to do right now is take a pause within all of the news coming out of europe and look at the american landscape into this important retail sales group. kriti gupta coming off of valentine's day, looks at your

lack of personal disposable income because it was all spent on valentine's day. she's got something to do with the lack of savings today. what have we got? kriti: personal savings as a percentage of disposable income, that is going to be really important because if you look at what happened with all of the fiscal stimulus that got deposited into bank accounts, it skyrocketed to the highest since the great depression. after the great depression, people were so scared of losing their money, they saved all of it for a rainy day. to see that same kind of skyrocketing in 2020 is pretty significant. that is also fueled things like retail sales. really, you just see this kind of decline from the 1970's down to 2009, the idea that people aren't saving as much as part of their income. tom: i am going to tear up here. for radio, you are doing log personal savings? kriti: i am.

you have rubbed off on me. tom: you are killing it. you did not drink the kool-aid. you drank the tang. it has come back to where we were. kriti: almost there. we were at 7.1% before the pandemic. we are now at 7.9%. but at its peak, we were at almost 35% of your income being saved, and that is why you are seeing so many being paid. lisa: this is such an important point because right now come of the rock and the hard place jon was talking about for the federal reserve, the ability for them to be able to curtail inflation before it becomes a self fulfilling prophecy and slows the economy down, can you weigh in on the fiscal drag which we talked about for a long time, and then suddenly heard nothing about, that we are expecting to get a $1 trillion fiscal drag this year, the most in years as some of those programs rolloff? have people factored those in and tried to extrapolate how much that really will impinge the savings rate?

kriti: what is interesting is the timing of this all because people were paying the timing of that fiscal stimulus we got in 2020 would rolloff by the end of the summer of 2021, and yet you are still seeing that kind of fuel especially into the holiday season that we saw last quarter. to your point about fiscal drag, take a look at what is getting pulled down in retail sales over the last couple of months. we will push this ahead to the data we are getting at age: 30. the actual data are encoded sensitive sectors. you're seeing it in restaurant spending, gas stations, less spending in things like cars. some of that disposable income that would essentially be spent on perhaps going out, taking trips, commuting more, that is where you are starting to see the squeeze. to put that into perspective, higher gas prices, higher inflationary prices, feed that into the fact that now you have less money to actually spend in addition to the fact that real wages are catching up broadly as

well. you have a flurry of issues here. lisa: one thing you do so well is you take a look at the economic readthrough and then get a sense of the market response. are you seeing a greater market volatility in response to every data point because we don't know which data matters the most for the fed? kriti: sort of. the knee-jerk reactions seem to be more volatile, but then they get all pared. the rest, you had this knee-jerk reaction and it comes right back. it happens within 10 minutes of the data release, so it is a very quick, kind of tradery move. what is important to keep in mind is what this means for the long term. the reason earnings are so good come the reason corporate america has been able to put up so much margins, is because that consumer spending ability. they are able to eat those costs that are passed on. tom: lisa, died in here. i think this is really important. we've got retail sales coming out in 38 minutes, and we treat

it homogenously. the difference between louis vuitton raising the prices today , luxury going up, but is walmart doing that? i don't think so. lisa: we get walmart earnings tomorrow before the bell, and there is this issue right now of whether you do start to get pushback. of course, there's the idea of the fed what actually can they do, raise rates? or are they really going to engage balance sheets? jonathan: thank you. let's get back to the news around ukraine. u.s. and eu countries helping ukraine with cybersecurity, according to an official. the cyberattack aimed tp -- aimed to destabilize ukraine. they have shut down some government websites to prevent the attack. they say the cyberattack against

the ukraine is purely psychological. some of the headlines coming out in the last 30 minutes or so. tom: i don't know how you stop that. you don't have a mensa go cord -- a minsk accord on cyberattacks. this is not just about kiev. it goes all the way to where the u.s. embassy moved to. it is all of the nation, not just one building more that. jonathan: it is something the administration in the united states was worried about. do they have to have this battle on several fronts? lisa: that is why probably the biggest take away from this conflict is the information wars and how it is being battled in a very different front. russia has been doing this for a long time. the u.s. is increasingly responding in kind, although perhaps not with the same kind of on the ground campaigns, but certainly taking their message very public very quickly. jonathan: the latest we heard from that one official is that the ukraine says a cyberattack still continues. we will stay on top of that. futures edge back 11, down about

0.25% on the s&p. the nasdaq 100 down 28, down 0.2%. this market getting set up for the retail sales print, 8:30 eastern time. yields come in a single basis point ahead of that at 2.03%. tom: over two days, curve steepening. we have gone from 35 basis points to 37. that is a nice steepening over the last 24 hours. jonathan: that conversation around seven, that is every single meeting this year at 25 basis points, the view from goldman, from bank of america. have we really discounted central bank balance sheet reduction? lisa: i also think we have the unknown of how much can financial assets take. we have always seen that central banks can raise rates less in each subsequent cycle based on how much debt. how do you then pair that with balance sheets reduction? i wonder how we even begin to price that. jonathan: do you think financial

markets can take anymore of tom's dancing, his french? [laughter] do you think we can get through the next hour? lisa: doubtful. tom: thank you. [laughter] jonathan: from new york, with tom keene and lisa abramowicz, i'm jonathan ferro. on radio come on tv, this is bloomberg. ♪

♪ >> the market is pricing and today what is going to be a transition year for the economy. >> i think it is going to be a volatile for a while. >> we have a more volatile market environment. the optimum value of cash increases. >> investors also need to be patient to figure out what is going on here. >> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. tom: good morning, everyone. on radio, on television, across this nation, we welcome you. retail sales in 30 minutes. an important consumer metric. the buoyanth