>> what we are seeing is very strong thing. >> it is a decision to slit on the economy to generate slack labor market. >> slower and slower payrolls. it is important not to get distracted by what is happening with the layout and the tech sector. >> that is why this is such a difficult labor market. >> this is bloomberg surveillance with tom keene, jonathan ferro, and lisa abramowicz. >> is payroll friday. good morning. this is bloomberg surveillance. alongside tom keene and lisa abramowicz i am jonathan ferro. features are basically unchanged. >> s the number, and it's going to be interesting. there is a mystery to this. this was a mystery report.

we don't know the end of december because as said, lots of labor statistics. a big tossup. >> eight consecutive months. >> yes. >> all the way back to spring. >> i have coverage on radio with paul sweeney and james glassman, without question, the most accurate labor calls. there was gloom about it that was wrong. the tech story is tangible but it is not a labor economy. >> labor market data this week has been tech from after tech from announcing what we have gotten used to over the last 12 months with his job comes -- which is job cuts. >> wire people not listening to the labor market data more, when fed officials are saying that is what matters to them? the charts i am watching say that fed fund rates and where the market is pricing in the

terminal rate. as gotten to 5%. but it is nowhere near where all the fed officials are saying we are going to get to. >> we have a full gallery. what is a. >> a lot of people are shrugging that off with there's not much difference. as a generation rate of 5.1. airtight about 5.4. >> is there a difference? >> my good friend james bullard says one thing yesterday. hours later, he said a different thing. they go with the wind. at least kashkari has been dovish. he's been dovish. he is at 5.4. >> that's dovish. >> compared to others? yes. others are out in the high-fives and people are warbling about seven as they move the market on 7%. >> ok. i'm going to turn to the market. that's the first time i've heard kashkari called a dove in the last year. >> before he was not a dove.

>> the kashkari of two years ago. features on s&p look unchanged. going into payrolls we are absolutely nowhere on the week so far. the s&p 500 heading for a fifth straight weekly loss. the longest losing streak going back to may. we can talk about cpi out of the euro zone if you would like. the headline comes in, but as the lead core cpi is pretty sticky and sticky is a problem for the ccp. >> that is been the story for 2023. the idea of the wind of it all. people can pick the direction and listen to every guest and pond and we have, but it's the wind of it. is anyone looking and confidence? i don't think so. >> with confidence? i don't think so. no way. >> the 10 year is 37309. >> we go into those payroll reports, but a lot of people are not looking for the head line

number. how much do they decelerate knowledge to much do they come down after the adp report yesterday mark putting aside how much people discount this they show wages growing compared to the statistics shown. we talk about core inflation in the euro zone, core inflation the united states, the fact that some indicators are going down the good side, but services are really the russian. we also get factory goods and durable factory orders, and i'm more interested in how resilient they will be there, considering the fact that it is really one of the drivers of inflations. we can parse the doves from the hawks, and the delta between them is not that great which is indicative of just where this fed is and how united it is. in terms of the rhetoric we are hearing, the fed president and lisa cook, and the richmond fed

president. >> you keep running out of breath there. >> we also other people coming in. the ecb chief economist, former fed head ben bernanke, and everyone is speaking today. >> are you excited about that, tom? >> warm and fuzzy. >> thank you. we are joined by the chief investment strategist at city walk management. >> happy new year. >> the labor data so far, let's go through. job openings are indicating a strong market. you look at the rate of this labor market. job claims are strong. what is it right now? do we have a type later -- labor market, or one that is going to crack? >> we have a type -- tight labor market, but recall that the reach these levels at the

greatest level of progress, so it matters where things will be. what are the dynamics that will add to this going forward? the easy one is the housing market. if you don't have home sales, you are probably not owing to have people who build more homes. if you think about broad construction, all of the work, for your decline that we had in them, since going back to world war ii, and also declines of private. what is the need for labor when we have massive increases in inventories, were not going to worry too much about american manufacturing, but mark thing, sales, advertising, these are things that tell us where the market will be. in the next 12 months. i think it is significantly worse than the are behind us, but were trying to catch up with the man. ask i looked at the principles of economics, and you are an expert at the chapter which is linking the real economy into your strategy. what do prophets look like, and

what does that mean for the fed? greenspan would say is a? . i'm not hearing this conversation in 2020 three. is it a big deal? >> i think it is a big deal. for the markets, absolutely. you want to think about the income. you want to think about profits as well as wages read there is again for one and a loss for the other, and we think that the drop that we have in profits this year will be low double digits. we have some of the action out-of-the-way last year with what happened with financials and some of the consumer areas, but it will be a disincentive to invest in the economy and rebalance a stronger way. >> one consensus i've heard start to form around the edges is a less offensive kind of view of tech right now. people are thing about tech is possibly gain since here. job cuts. the cost-cutting.

do you agree that it will dampen some of the pessimism and create some of cybertek this year? >> not immediately in the end, if we had a really severe drop in demand for some of these companies in terms of tech, there will be cyclical components. a lot of advertising. merchandise. the result lot that is not the same that is clustered together in late 1990's. what we have had is a big adjustment down in valuation for interest rates. the economic impact probably is and fully there yet, even in the tech sector and the cyclical areas. but i think we will get out of it and you can see the tech industry that has a lot of covid benefit and adaptations we needed. to use tech to make the economy work during covid. some of that was access and i don't view getting cheap enough because of low rates because we

didn't have that for recovery. it will come before the year is out. let's remember, there is not much that changes from the beginning to the end of the a. how different the years will work in the last few years. i think we will probably see that recovery within 2023, but not soon. >> what is leadership for the year? >> immediate leadership is the highest quality company in the industry having a lot more profit they pay out in dividends with a razor dividends. it is pharmaceutical a. is the noncyclical industry that's been beaten down. there are some little anomalies. china had a hard landing in 2022. we are following that same sort of policy tightening course that could get us better. they are ahead of the game on that but really, it will be a recovery. i think the fed is imposing a severe slowing on the economy. then, the recovery from that we

smaller, so it will be a cyclical leadership again, but we haven't felt all of this in the economy yet. all of these orders numbers. these readings at 45. they are telling us that the good sectors are going to have a big drop, and it will not be leaving all of the service sectors on escape -- unscathed. >> thank you. echoing some of this is be of a this morning. we think the next big story from the markets will be a sharp loss of growth meant him in response to monetary tightening. they are not constructing european equities loss the new year. they put a big? on that. >> this is important. they just said it dovetails perfectly with your colleague rid when citigroup sees and what is called the jargon of a diminished choice set. you are sitting at your desk, and you have to figure out what to do, there are fewer and fewer ideas because of the new constraints, and one of those

constraints is money it's finally costing something. what was said a few days ago, it was really fewer things to pick right now. >> by bond, if there is something we can agree on, they are lining up to start 2023. >> i thought this was brilliant. i agree with her. but she said you will clip the coupon if you are lucky. that is an outlier call. >> there are a growing number of people, and there is a collision course between the fed and where the market expectations are. it is a comfortable dance with volatility throughout the air, that could create perhaps a premium for a coupon that could give you income to offset that, but not much more. >> looking forward to this. she will join us later for td. this is a fantastic start for payroll friday. we will catch up with tom for sally of rbc. following that, a former member

of the federal reserve and jeff rosenberg. looks like the equity market will shape up on the s&p 500. that is actually nowhere, going into the job sprint and a couple of hours time. we are positive by a little more than 1/10 of 1%. yields are up a single basis point on a 10 year. zero dollars not doing much at 10506. what a choppy week as been. holding onto 74. $74 a barrel and positive one half of 1%. the estimate is 202. from new york, this is bloomberg. >> keeping up-to-date with news from around the world with the first word. today's u.s. jobs report will help determine what the federal reserve does next on interest rates. the estimates are that employers added fewer jobs last month read this indicates a cooling and labor market that would reduce the need or higher rate hikes.

the data released thursday shows the job market is still resilient. inflation in the euro zone has returned to single digits for the first time since august. they are hoping that the worst ever spike in consumer prices has peaked. prices in december were up 9.2% from year ago. slower growth in energy costs or a big reason. republicans are making history on capitol hill. the party has blocked kevin mccarthy from becoming speaker of the house on 11 ballots. that's a post-civil war record. the standoff has left republicans fractured after they reclaim the majority rid mccarthy's offered concessions to hard-line conservatives, but so far, he has not been able to get enough votes. russia is seeking more cash from commodity producers and stay companies to offset the cost in the war of ukraine. proposals include one-time payment from fertilizer and coal companies. ross's budget has been increased -- increasingly squeezed by

spending and an economy battered by international sanctions. holiday travel meltdown prompting southwest airlines to revise a financial outline. the airline canceled 16,000 flights over eight days. southwest says that it is assessing flight disruptions in compensation to passengers for hotels and meals. global news, 24 hours a day, on air and on quick take, powered by more than 2700 journalists and analysts and more than 120 countries. i'm lisa mateo. this is bloomberg.

>> it is time for the republicans to get their act together. we as democrats are ready, willing, able to partner with them to find common ground whenever and wherever possible. not as democrats or republicans, but as americans. it's time for congress to get to work. >> that was hakeem jeffries from york. life from friday world's, we are counting you down two hours 13's way. your action looks like this on s&p 500. positive by 1.3%. trying to raise the losses, heading for a for three consecutive loss on the s&p 500

on a weekly basis. try to push higher by a basis point right now on the tenure at 37235. we've had dated this morning from europe. i will touch on that briefly. we've got a problem with core cpi over in europe. headline inflation is slowing sharply. the core cpi, year-over-year, in the euro zone, still five went to percent. higher than the previous month read >> it went up. i did know that. interesting. a year-over-year basis. >> we have to get apparel on that. it is important with the condition index in this job report. it is evermore accommodative. it is buttressed against recent maximum accommodation. >> we've asked the question are we seeing an unwarranted easing of conditions given the object of inflation on a path where they are convinced they are back on 2%? >> we listen worldwide to experts on a given theme. it was good to listen to a

professor in oxbridge. jonathan ferro election -- lectured us on american civics. you nailed what william cowan, the distinguished william cowan, the secretary of defense with alton fry of the council of foreign relations. the democrats could offer motions to offer motive to select a speaker capable of working across the aisle. nominated with experience and respected from outside the house. the trigger a contested health, with the original constitutional conception. you nailed this. >> i said that on air, so much her accounts, but i'm glad you said that. >> oh boy. seriously? >> lets good emily porter on this. >> this stuff was set off air. >> i lost count. how many votes are we up to? what is -- this afternoon -- is it the 10th or 11th? >> yes.

i'm sure this morning will be the 12th. at noon. >> i want to talk about this reality. i talked to washington insiders yesterday and they are waiting for common sense to come in here , and there was someone from outside to come in if mccarthy agrees. you could tell me the process. they mention the governor of maryland, hogan, they mentioned a gentleman from michigan. upton. is there a possibility upton or hogan could save the day? >> fred upton's name has been circulating in the twitter world, but this is really just interesting thinking. this is a west wing episode. this will not happen. at that point, if mccarthy is unable to get the boat see needs, the republic and's will just try for another candidate. they're not going to strike a deal with the democrats. that is a hail mary, and honestly, it is just a dream world. it would not happen. ask what's mccarthy's dream world? let's redux it. who does he call this morning?

>> is the same. the republicans are going to have a virtual conference this morning were mccarthy and his leadership team will go through the new rules. this is the same concession we've already spoken about. the biggest one being that one individual can have this motion to vacate, and they may need more freedom caucus members to be on the very important rules committee. i spoke to aid to one of these dissenters who said the devil is in the details, when they become public. if mccarthy was able to with the washington post, that these individuals are starting to move to support him, if he goes to this boat, and he starts to ease some of these numbers, and you have those 20 move over, you see some progress, they are calling that phase i according to the washington post, they would move it to phase two which is an immense pressure from conservative republicans and

moderate republicans to get the remainder on board for him to hit 218. we should make it clear that if he is able to clinch this, and it could go into the weekend, he will start his speakership very weak because he is giving away so many concessions. >> us right want to go. the phase ii carwash doesn't leave any moderate republicans not wanting to support kevin mccarthy and nominate someone else because of how much she's given up. ask the issue is that even if he goes to someone in his leadership team like steve scully sue's name is been mentioned a number of times, they've already worked on this deal. patrick mchenry and representative emmer or, they work on the steel. they know they can get out of this. this is a weekly or regardless of who it is, unless they go if they tree moral land that tom is talking about where you get a democrat on board with an outside unity canada. >> does this make the more

extreme or more moderate? they have to work more closely with the democrats to get something done? >> we were spoken to about this yesterday when it comes to the debt ceiling. everyone is talking about the fact that this just foreshadows how difficult those negotiations are going to be when it comes to raising the debt ceiling and everyone is concerned about thing on that cliff, the way we were in 2011. she is actually saying that a lot of these moderate republicans come from biden one districts. what they want to prove after these absolutely chaotic tobaccos on the house floor, being able to elect a speaker which we have not seen in a hundred years, it want to show they are able to govern and they are not paying fast -- playing fast and loose with credit and spending. this could potentially show the negotiations will be easier, but that remains to be seen. >> i want to set up the next hour with you when you come back, but briefly, what is happening with the ukraine and

russia and they cease-fire from bud rippon? >> don't read into the cease-fire. vladimir putin is being beaten on the battlefield. what we have seen in the far east, most recently in russia, admitting that they lost 89 members of their military, that number was raised, and right now, he has suffered a number of defeats. this is a moment for vladimir putin to given to idea of an orthodox christmas that they wanted a cease-fire. this is a moment to restock and look at goods, and for the ukrainians, if there are russian military on their soil, and they do not have territorial sovereignty, there is no cease-fire. >> will continue this in 60 minutes. looking forward to it. thank you. this is payroll friday. if you're just tuning in, the estimate this morning's 202,000. the range is pretty big looking ahead to the number we get into hours time, but 202 is the number were looking for. the unpleasant rate is at 3.7%,

the overwhelming folks on wall street, is going to be wages. 5% is the estimate. 5.1% was the previous number. ask that is where people are looking. but that said, the number will be interesting with buildups saying that it has to fall below hundred thousand for a monthly read in order to get perhaps where the fed wants to go. wages will be leading an indicator as to how tight the market is and if we are closer to that. >> i would go with that. it's a massive ministry. as you mentioned at the top of the show, 200 up to 20 for the wage dynamics. it will be great, but it is a more nuanced thing then pundits treat certitude. you want to say profits versus wages. that's an important dynamic, and i would point out that on the trade balance the other day, exports minus imports is compared to something we've talked about 15 to 20 years ago, the domestic final sales. the american interior.

all of this jumble staggers out not to today, but it gets us a january 12 read ask you think pundits have the certainty right now #>> we can believe. >> we believe, and then there is an asterisk. we don't know we are talking about. >> that is brutal. >> will have a conversation with wells fargo on the final mark in old -- in inflation. 2.2% on the big news from last year. a conversation coming up next.

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>> two hours away from the payroll report with equity futures on a 10th of 1%. we look across the board on the nasdaq. it is slightly negative with 1/10 of 1%. down on the week of the s&p 500. .4 percentage points. the fifth consecutive weeks in the bond markets. this is not traded on labor market data, which is been resilient this week that is through thursday on the 10 year, down 15 basis points. maybe you can blame them, or say something about the fed speak bit a sword between hawks and doves. i have no idea. people are lining up. 3.72 72. here's what we are looking at. you are looking at the short end, and you have seen yields rising, the yield curve

inversion for the three month and the 10 month. reaching that. they are talking about that, but i get your point. we are on a collision course. >> -74. it is with priya mitra. >> there is an inversion. for a number of months, -14, we say there is a math -- massive call. we are at -74 on 2/10. we will get to that in a moment. we want to get to the foreign-exchange market. euro-dollar has cpi data. the headline is sharply falling we are told, but if you look at the core, sticky and elevated. still problematic. lisa mentioned remits ago, the chief economist of the ecb, so look at comments on that. the euro-dollar is holding on to 105 at the moment. 105.08. -1/10 of 1%. we are to arts away from the tests -- december payroll support -- report.

set to hold steady at 3.7%. blackrock is raining and -- weighing in. >> it is a difficult labor market. we are seeing the softening of parts of the professional class but if you look at other parts of the labor market, hospitality, west or aunts -- restaurants, we have hundreds of thousands of workers lost earning the pandemic and it never came back. we are still missing workers, which is why the crit rate is still high, and it is widely per mark remain somewhat resilient. >> still a pandemic labor market. a ton of new ones. >> you and i mentioned this yesterday. it is still the thing. where are we on the pandemic #we are in it. it is still under 400 days, but the pandemic is still statistically very valid, and it is this economic story. once you have large companies who are able to hire amazon and met up. they are laying people off, and

then small to medium-size companies are looking to hire, that is reflected by the elevated job openings we are seeing across the company -- country. i am totally on board with this. if you have a narrative in the argument, it is easy to make it because there's a lot of data to back up whatever you want to say. >> i will go with that. you talked about this earlier, there is someone who is out front of us on this insight with the last moment here at the american economy, and sarah house joins us. i love what you said. you are updated in the new year. we are hardly falling apart. i believe i read that in economics 302, years ago. what is hardly falling apart mean? >> we are seeing the job market softening to some degree. we see demand coming down and layoffs no longer improving if you're looking at the claims data. i think when you step back you look at where things are on an absolute basis, the overall level of demand, just how low we

are seeing layoff levels, this is still a very strong jobs market. we could see that in a wide range of data. everything of the low unemployment rate to strong job wage growth. >> let's go to the payroll. john mentioned 202 is the number. i don't know the three month moving averages with revisions today. what is the run rate of a normal job growth for the nonfarm payroll statistic. we used to be shocked when it was 150. others have gone below that. where's wells fargo statistic of the normal monthly growth rate if we are not booming like we are now? >> it depends on labor supply growth. participation in population trends are by no means favorable. we step back and factor those in, so the atlanta fed estimates really need 85,000 jobs per month just to keep the unemployment rate at 3.7%. let alone the meeting going a

little higher to stomp out some of these wage pressures that are contributing to inflation. >> i've never heard the statistic before. under 100 i've heard not but 85,000. that is a stunning statistic for where we are. >> it takes more work. it takes more work and decrease of the demand picture in order to get employment where the fed wants it to be. it is perversely higher unemployment as they seek to combat inflation. how long do you expect it would take at the shortest to get to a level that is more comfortable for the fed and maybe has more of a dampening pressure of emplacement on the labor market. how long does it take? >> we will see more market slowdown as we move through the year. we are seeing those firms curtail those plans. those plans are the lowest we've seen since 2021, and it is roughly on par with what we saw 2019.

there is recent job growth that was caught up in leisure and hospitality. the government sector and the payrolls, for example, but as we move forward, with the environment getting increasingly challenging with a high rate environment and the broader growth outlook, you will see businesses get cautious when the cost of labor is high. i think that will put a dampener on the pace of payroll growth and we will see it more around the spring or midyear. >> as we talk about recession in the united kingdom, we see a series of strikes around the industry, particularly in railroads in the u.s. and on the peripheries. there been a number of labor activities movements. how much has the pendulum stayed in favor of the employee for the first time after so many years of the employer having an upper hand? >> the employees are still in a relatively good position, compared to what we have seen over the prior deck is. i think some of the sway has

weekend a little bit. the recent months. we have heard from clients and they are seeing it easier to hire and find quality workers so they are not quite as worried about losing some existing workers, so i think we are trying to see that come down in the margin, but stepping back and looking at where we are in an absolute sense, employees still have a lot of sway. >> a philosophical question. one of the great things of the pandemic was the invention of $17 per hour because all sorts of joy norman opsware houses need to put bodies in them.

is there a permanence to amazon and others did with china or miss warehouses where they paid up and destroyed the labor market. that drifts away. >> in terms of long-term trends towards economists, i think that is in place even as we have seen that. it leaves a long-lasting market with industries that are having to compete through that wage level.

everything from retail to things like daycare services. those are industries that have to make a payoff in order to compete with these industries, and we know that it is a nominal wage, not just over time. this is a level shift up that will keep wage pressures under other sectors as we see a slowdown in the e-commerce and warehouse industry. >> quickly, we are arguing about the distance between 5.1% and five point or percent terminal rate in the fed funds. the distance between full kashkari. how is that different? >> i don't take 515 or is really that big a deal. it is how long we stay around those levels so there will be a time that tells whether we get there, but it is really more about how long you stay very restrictive. >> thank you. sarah house of wells fargo. neel kashkari is at the minneapolis fed. they call that the sap and step of inflation flight. the second step is keeping rates there to pause and wait for the disagreement in the market for communication between the federal reserve right now. >> i could not agree more. the fed funds rate shows a rate cut for next year. even if they keep the fed funds rate at 5%, for one year, or two years, that is a huge difference. more than just getting there once. >> the 10 years 37250 three. what is tough to walk? you know the story well. southwest and the premarket

looks a little something like this. the stock is lower by one percent point. you are aware of the statistics between december and almost 51% of the flights were canceled by southwest according to flightaware data. they lost 400 million dollars. the company is expected to report a net loss after this chaotic. >> i will be honest, i have not flown southwest much, but this is part of the culture and fabric of texas and a huge part of this country. this stock is basically flatlined with a decline. it is back eight years. that is stunning. this is southwest. this is the profit center of the airline business, that image is just loaner. >> there will be a massive pr

effort over the next couple of months, and we talked about this. will you trust them? if you need to get to a business meeting, we trust them over the winter. to get to wherever you need to go over a holiday? >> how much do you need to adjust the price to make it take a risk? >> you need to come out with an analyst. an expectation. you talked about affordably dollar loss, you are talking about a acre north of 800 million. 550 million tied to the cancellations themselves. an additional hundreds of millions of dollars to compensate for the car rentals and hotel rooms and all of the last travel when they were marooned during the holidays. >> in my reading of this from the unions, and granted, they have an angle on this, but is simply that they ponder invested in technology. on wall street, if you do that, you out of business. no one talks about what's going on, but what did they do this a were not the old southwest?

>> that goes back a five-year project. ask this is been talked about repeatedly in the industry. it raises questions about the capital return programs of last couple of years. >> of this is a basic infrastructure of the nation as a has been considered with all of these congress members standing behind them and supporting them in a crisis, then they cannot have the same program. it will be a big question. >> the stock is down. it is payroll friday. we'll catch up with tom per sally. i believe he is above consensus with a payroll. that's where you need to be over the last 12 months or so. eight consecutive beats on the day. payroll friday. we make it? we'll catch up with tom in an hour. in new york, this is bloomberg. >> we are keeping up-to-date with news from around the world with the first wordpress dime lisa mateo. kevin mccarthy's fight to become speaker of the house strikes into the fourth day after his historic 11 rounds of voting. the california republicans still

couldn't lock and all the votes needed from gop dissidents to hold the position. that is despite concessions on house rules. mccarthy and some of his supporters said they will press ahead with negotiations, no matter how long it takes. >> u.s. authorities are ramping up pressure on sam bankman-fried's inner circle. they are now squirting icing one of the closest associates at the ftx crypto exchange. they have not been a fused of wrongdoing, and it's unclear if they will be cooperating with investors or will do so. ask a major shift in a chinese policy blamed for exacerbating one of the biggest real estate meltdowns in the country history. they plan to dial back the so-called red policy. every lasix restriction with borrowing. property firms may be allowed with more leverage, and the deadline may be pushback. >> quarterly profit at samsung fell by the most in more than a decade. that may mean that the global

economic slowdown may be hurting electronic demand even more than expected. samsung's operating profit 169%. south korea's largest company has been grappling with weak man for memory chips, smartphones, and displays. global news, 24 hours a day on air and on quick take, powered by more than 2700 journalists and analysts in more than 120 entries. i'm lisa mateo. this is bloomberg. this is bloomberg. at booking.com,

finding perfect isn't rocket science. kitchen? sorted. hot tub, why not? and of course, puppy-friendly. we don't like to say perfect, but it's pretty perfect. booking.com, booking.yeah. >> this is a good signal for

inflation in 2023. >> that was jim bullard of the st. louis fed had >> he said exactly what chairman powell said in the news conference, which is we are getting closer to sufficiently restrictive. that is precisely what the chairman had said in the news conference that market will do its thing. equities are unchanged. good morning. the s&p 500 is going nowhere. unchanged on the session. yields are up basis point. 370 253 on a 10 year. just to break it, 105 for now. 10497. we are negative a quarter of 1%. a problem in the euro zone even if cpi is fading. what's the story in europe? let's get to southwest. pulling a number on things, the stock is down. we expect a net loss in four q. a pretax negative impact with $75 million with operational

disruptions through december. putting a number on those disruptions, canceling more than 700 flights between december and december. are they going to get a bailout during the pandemic? they all did. this is what we were talking about. i was listening. >> the capital return programs over the last five years go back even further. then they come on say we under invested in our infrastructure. that is why we are getting a ton of pushback. >> let's put a number on that. they paid out nearly $10 billion to shareholders leading up to the pandemic. they had that much cash to reward their shareholders. the question is, why do they invest in the basic technology. this is what the unions are saying, but there is also a question, and shareholders are saying that as well. >> they of the shared -- same problem. they are no different.

>> i know that. i am laughing because this is a personal issue. >> you want to tell us who you are hooking up with? >> i don't think i will. i have the advantage of a gulfstream, and it's fine, but i really haven't picked a new carrier. ask i thought you had. next i don't think the public really cares what you fly or i fly. they care what lisa flies. >> we know it lisa flies. gulfstream. she was stuck in atlanta. >> we don't have to get into that. i think there is a question with low-cost airlines for those who are catering with families, how much pain are they willing to tolerate to continue to for casing, and i think that it's went to ultimately be a question. what factors will be involved in that. that's what everyone is saying. the small perks you can get that are the lowest on the totem pole of expensive's. -- expenses. >> it is the extended train vouchers because they absolutely

nailed it last year. on the job day, with a victory lap over the number one call and terminal rating economics among all of our guests, with uber, it was stunning when you said about 5%. no one believed you then, and now, you are the norm. however you changed your dynamic of the terminal rate in the last number of weeks? >> we haven't changed it. we are up 5% terminal rate, and we expect to more basis point rate hikes. i think the way to think about it, and how he thought about it last year was really thinking about fed funds rates. we thought the fed wanted real fund rates at 1.54 1.6%. then, depends where you think inflation would be. we think inflation would be hanging around 3.52 around the vicinity. starting around the middle of this, so that's how we get to go. >> what is the economy doing. it is jobs day.

maybe you are out front on they, in august, but what is the job reaction function to the 5% call. >> economists are pricing in a terminal rate of higher than 5%, so there is a difference between traders and economists. the traders think the terminal rate is a 5%, the fed will cut pipe 40 bits by the end of 20.3. economists think it will peak at 5.2 5%, and the fed will not cut. where we stand is that the terminal rate will be a five just because it is a near-term downward momentum of inflation actually pretty strong, given what is happening in china with commodity prices. i think even in terms of jobs, the headline number today from the payroll would overstate the tightness of the labor market because last december, in the middle of the december

revisions, they came out, and the jobs report we are getting is based on only a sample of firms. it is not a definitive number. once every year, they will revise all the numbers in march were the use a sense a population of firms, where the data is a definitive data of what's happening in the job market, and that is an early preview of the number from last december, and it's not looking good, so the labor market is actually cooling faster than what the robust nonfarm payroll number would suggest. >> is that what the market is sniffing out? we talked about the dissidents between the market and the economist, and markets tend to be correct, and economists have not had the best track record, so we are talking about at what point the market is sniffing out exactly what you're talking about, may be more slack in the labor market than we are representing with headline numbers with rapid

disinflationary policy. how much is that going to push the fed later this year? >> for sure, the traders, markets, they have money where their mouth is, but i do think the economists have an advantage in the understanding of the reaction function. that is serious about not cutting, so i think the market is still a little bit overoptimistic with the federal cut, but the economists are right.

there are wage persistence is that our underlying inflation stronger. the market thinks the inflation will become a nonstory by the end of this year. >> by the end of the economists, we are asking up that about the fed which is a balance of six. it is equally balance between too fast and appealing the economy. fighting inflation. it is asymmetric towards fighting inflation, disk height the disinflation we are talking about. >> given all of the things that we know today, the data we have seen our hand, the risk seems to be balance. we are seeing data that seems to have inflation data that is surprised on the downside rather than the upside. however, the battle that the fed is fighting, they are definitely learning from the mistakes they had last year, is that there are all these unforeseen shocks that could come on in this uncertain world, and may be labor strikes, union strikes, later this year, or just an unforeseen strike that could be ride their whole flight, so from a risk management perspective, you want to come out ahead of that because inflation expectations are still a little bit agile to additional shocks. >> thank you. bloomberg economics looking for

a terminal rate. it was not an infection. decidedly last year. >> two calls of the years. i go back to what was said a number of months ago from 40 basis points to 50. here we are at -70 or. no one talks about this anymore. it does even come up in conversations i have. >> part of this is because you could've found a yield curve model, and it has been pooh-poohed as to whether it is predictive of a recession. so there is a question of whether it matters. that said, we can see how far we've come now much it is overly sanguine about what is suggested. we don't want to jump on board about the predict nature of the yield curve, but if you're willing to accept a high yield in the near term or long term, that is something about where we are at. >> you can dismiss it, but this goes back to craft a narrative

around it. but you are right. i totally agree few. it is significant when you earn more for a money market fund rather than the country for two years. >> it says something about where the investors heads are at. >> i am a traditionalists into what is important for not paying attention in the vector over the last 15 days. it has not been discussed, which is a -75 basis points right now. a huge body of people unaware of the further version. >> this is the biggest: payrolls this morning. looking for a punishing number. more in just a moment. this comes up next. >> what we will do.

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>> we are seeing a strong job market. >> this is driving up employment to slow down the economy to generate slack and labor market. >> slower and slower non-foreign payrolls, and it is important not to get distracted by the way in the tech sector. next it is industry, and that is a difficult labor market. >> this is bloomberg surveillance with tom keene, jonathan ferro and lisa abramowicz. >> new rule. in the new year, payroll should come out on the second friday of the month. it doesn't feel right. >> you want to