>> at the end of the day we have a set of circumstances where the fed is intent on writing in the labor situation. >> higher their prices remain, that's going to force the fed to raise rates higher and potentially keep rates higher for a longer two of -- longer period of time. >> we are moving out of the inflation regime. >> disinflation will look very, very different. >> this is "bloomberg surveillance." jonathan: waiting for inflation

data in america. cpi thursday just around the corner. are you excited? tom: sam goldfarb nails it. it is super court cpi thursday. serving, x housing. david rosenberg is rolling in his grave, saying you don't disassemble. it is a sum of all these parts. jonathan: live from new york city, good morning, good morning. this is "bloomberg surveillance." i'm jonathan ferro. lisa abramowicz's offer couple of days. equity futures right now, positive .2%. does the gloom stack up with what we are seeing in this market? copper prices, active 9000. european banks are up more than 40% from the lows of last summer. make sense of that. tom: the map of the gloom three

weeks ago, whatever it is, to list all of these different items we see in a bloomberg from the, we have an extension of accommodation today. out a positive number, out to six standard deviations. that confirms all the good news you are talking about. jonathan: is it a conundrum for the federal reserve? tom: huge. jonathan: bank of america says it is not. they should not obsess over the fact this market is pricing in rate cuts. tom: nobody cares about my opinion. i'm going to state that the accommodation a good news we are seeing here is something he can't deal with until he sees inflation break. jonathan: we get that tomorrow morning. today, light on data, light on fed speak. maybe that is good for some of you. equities up .2% on the s&p 500 yields come back in.

we are going to talk foreign exchange in a moment. euro-dollar up .1% there. just the renewed optimism off the back that goldman note expect -- suggesting we could escape recession in the eurozone. tom: folks, here is the brief. brammo is so gone. gareth bale retired. i don't know anything about soccer. i love this guy. they just make things happen. jonathan: early 30's. very young to retire. i think he is fed up with the game and wants to play golf. that would be my personal opinion. i don't think he was asked -- was respected at all madrid -- real madrid. he fell out with the club and it looks like he got bored of football. tom: we've never had a brief like this. jonathan: this happens sometimes.

sometimes players just kind of leave. do you remember said than walking away from all after the 2006 world cup? tom: this is a brief. this is the "surveillance" read this morning. cheers. right there, jon. don't spell that. cheers. jonathan: vasileios gkionakis joins us now. in the face of all this global recession talk mother market is having a different conversation, isn't it? vasileios: to a certain extent these forecasts about recession are a bit outdated and based on a number of forecasts that were produced in q4. that's not to say they are not going to be economies that experience a sharp slowdown or

recession. the u.k. being one of them. i think there has been a massive change in the market even in q4. the initial headlines about china reopening morphed into concrete and swift action. there has been for support in the housing sector in china. i think what we are currently seeing is a change in mindset which caught me by surprise. to support growth in china. it is basically shifting the focus of the market into a rewriting of global growth expectations higher. this is precisely what i these are telling us. this is what relative equity performance is telling us. that is definitely what the dollar market is telling us. jonathan: the peak of the u.s. dollar was late september. the low in euro-dollar, around the same time.

that low on the euro was about $.95. what kind of upside are you thinking about in a single currency now? vasileios: i think right now we are right very critical levels. i think 1.0780 is quite a strong resistance area. before we clear that level, obviously we are going to see a lot of leverage money buying into further upside, and potentially this is going to apply -- imply that real money accounts are also going to fall. fundamentally you have to take a step back and say, to our models suggest? i think right now gravitating toward a fair value range of 1.12 to 1.15. you don't know how the china reopening is going to pan out,

first of all i don't think a 25 basis point repricing higher or lower in the fed is neither here nor there for the market and the foreign exchange market. assuming that we get a relatively smooth china reopening, which applies -- which implies a pickup in chinese imports, i think we can gravitate toward this level. tom: that's right where i wanted to go. i'm talking about you and your great fx team, but all citigroup, including ed morse' world-class call on oil last year. are we fighting the last war? are we fighting the 2022 war? it seems to me right now there is a whole, not gloom crew, but a cautionary crew not modeling

in the potential upside of 2023. vasileios: absolutely. i think you hit the nail, because the a lot of the discussions i have been having, especially with u.s. clients, if i measure the time i spend talking about the fed, it consumes about 65% to 70% of our discussion. that was the big market thing back in 2022. since q4 we have had a massive shift in market narrative. it is putting much all about china right now. if this thing pans out relatively smoothly, it will have hiccups, especially in q1. let's call it the trial period. i think it can prove that change in the mindset in beijing can

actually bailout global growth and morph into an upside in global growth and trade as well. jonathan: is this a repeat of the post-financial crisis? is this a repeat of that? vasileios: we certain extent it can be. we were hit by completely different shocks. in the gse -- gfc, we were hit by exogenous shocks. we were hit by an exogenous, it was covid, which started building a lot of saving buffers and eventually meant we had to deal with extremely high levels of inflation. this time, during these past two years china has been completely shut, or at least to a large extent shot -- shut.

all of these bottlenecks, i believe they are going to start getting released. they are going to become less of a hurdle into the various trade chains and channels. i think this is a positive for global growth. jonathan: vasileios gkionakis. just fantastic over at citi. we talk about china, you have to break it down quite simply. demand-side questions, supply-side russians. on the supply side, does it deliver relief or does it lead to further supply-side dislocations off the back of that demand we are expecting? tom: i'm going to go to jonathan spence. they have one mandate within the regime, and that is to marginally employ the people. that means fiscal stimulus, and particularly a bailout of their domestic real estate. that statistic yesterday from julian emanuel, china cpi, does

not get you to a gloom of a good institution world bank. by definition they have to look back. i get that. jonathan: non-passes looking at maybe be a one handle on global gdp. the price action is not confirming that outlook. tom: i will always defend these institutions. they have to look backwards, and that's what i saw yesterday. jonathan: for an investor you have to answer a simple question. should you price in a global growth rebound off the back of china reopening or a global growth slowdown? tom: you should tune into "bloomberg surveillance" tomorrow. these are the drips. spanish inflation, three other inflations, i can't remember.

may be a better net gas pricing in europe. these are accumulative good news is on disinflation. jonathan: i think this conversation can change tomorrow morning. completely. tom: we are not deemphasizing the inflation or tomorrow. are not going to deemphasize the inflation report. jonathan: it's -- his frustration about the conversation being dominated by the fed. it's what we are going to talk about. tom: 65% of his chat is consumed by fed chat. that's almost as bad as you. jonathan: do you think it should be 80%? tom: it's 80% with you. jonathan: i'm trying to lean a little bit more into the china conversation. equity futures up .2% on the s&p. yields are down by four or five basis points. >> keeping you up-to-date with news from around the world.

president biden says he was surprised that classified documents were discovered in an office he used before he was elected. he says his lawyers did the right thing by calling the national archives, which to session of the papers the next day. congressional republicans are parmesan bashar promising to investigate. the u.s. will bring ukrainian soldiers to oklahoma to train. about 90 to 100 ukrainians will take our. normally training on the patriot takes several months, the u.s. is looking for ways to speed that up analyst workers are on strike again today. members of two unions are walking out as part of a dispute in pay and the national health service. bloomberg has learned apple will start using its own custom displays in mobile devices as early as next year. that is a blow to partners such as at samsung and lg. the company plans to begin by swapping out the display in

apple watches by the end of 2024. after years of scandals credit suisse is tightening its belt. the swiss lender is putting the bonus pool for 2020 about half. the move would win the amount down to about $1 billion, with some employees likely to not receive any bonus at all for last year. global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. i'm lisa mateo. this is bloomberg. ♪

>> people know i take classified documents seriously. they found some documents in a box in a locked cabinet, or at least a closet. as soon as they did they realize there were several classified documents in that ox bama, and they did -- box, and they did what they should have done. i was surprised to learn there were any government records taken there to that office. but i don't know what's in the documents. jonathan: the president in a touch of hot water.

live from new york, good morning. about 26 hours away from a cpi report in america. the fed speak, pretty quiet today. your market pretty quiet too. equity futures positive a little more than .1%. yields have come down four or five basis points. crude, watch out for this. we are up .4% on wti. watch for stockpile data later today, tom. some evidence perhaps the stockpiles have been climbing. tom: i agree. i have brent crude rounded up to $81 a barrel. even though the moves are small, they continue the trend of accommodation, of optimism, of a constructive view forward. i say this because the vix wasn't moving yesterday they vengeance, came in with 20.75. that is a shift in this trend. jonathan: never mind the vix,

copper prices back through 9000 for the first time since last summer. that china reopening story, pushing it through base metals in a big way. tom: we get a briefing now in washington. whatever your politics, it is most interesting in washington. greg valliere's chief u.s. policy strategist at agf investments. there are about 14 ways to go here on your new washington, but one is to be the "big bipartisan win" for speaker mccarthy on china. how big a win was that? we are going to go after china. is that news? greg: i think it was clever. he knows there is antipathy toward china. he played on that and got a huge victory yesterday, creating a

committee that's going to look at china stealing intellectual property, trade violations, blah, blah, blah. he shows he can get votes from democrats. tom: where else can he get votes from democrats? greg: call me crazy, but i don't rule out a demo -- an immigration deal. i think you have a lot of people in both parties would like to get something done. i don't totally rule that out. jonathan: starting to see some restrictions come through from various pace -- various places to restrict chinese investment in real estate. heard this morning that governor desantis might make the same push in florida. are we going to see more of that? greg: around the country and talk to business leaders. to a person they will tell you that china doesn't play fair. that they steal things.

i'm not saying i believe it, you hear it from everybody. i think there is going to be more. true go got a smack down from xi a month or so ago, so the relations between north america and china are going to stay rocky. jonathan: the tension is obvious. less obvious has been the tension between the europeans and americans over the investment around things like ev's. have we reconciled any differences? greg: not really. i wrote this morning i thought mexico was a. just platitudes. nothing accomplished, including no deal on dvds. -- ev's. i thought the summit was useless. tom: what did the progressives, the far left wing of the democratic party, what did they learn from the mccarthy speaker fiasco? what lessons were taken from the

strength and negotiating power of the far right by the far left? greg: two things. number one, some people in the democrat's party feel this gives them the opportunity to continue branding these extremists as the enemy. that might help them. but i think the bigger take away is going to be a tough fight. it's going to be a nasty year. there is going to be hearings. i think there is a chance trump could get indicted in georgia later in the month. it's going to be a nasty year, and i think the democrats got a wake-up call. tom: we have had a nasty year. i'm going to go back to the alien sedition act. this is normal in american politics. scope and scale that back across our history. have nasty is nasty? greg: when i started you saw the fights over vietnam and watergate it has continued to go

on beyond that. it is about the fundamental role of government is it a reduced role? is it a big role? that's going to be dominant this year. tom: on the front lawn of your house in new hampshire you have a big poster that says we are first in the nation. new hampshire, by constitutional law, has to be first in the nation. is this silly politics or is there substance here for our viewers? greg: i think there is real substance in that there will be a delay, certainly in iowa. maybe new hampshire as well. knowing people in my home state i think you will probably see that as the first. already lots of democrats are on their way up to it -- our way up. tom: can you see jonathan just had to towing in l.l. bean? it is just a sight to behold. jonathan: you lost me, tk.

tom: not unless there is room service, right? jonathan: you tell him, greg. greg valliere. thank you. developing story in the united states of america. this off the back of reporting reuters. the u.s. federal aviation administration system that alerts pilots and other personnel about hazards or changes to airport facility services and relevant procedures was not processing updated information. the regulator's rug -- website showed today. over 100 flights were delayed into or out of the united states as of wednesday. it was not immediately clear if the outage was a factor. information still coming through. that is the reporting in the last 30 minutes or so. the airlines are a bit softer. we are down about .5% on american.

southwest, which has had its own troubles with some systems, is down 2.8%. tom: you make jokes about it, what it is not funny. there are international flights coming in. it is time on the east coast for all of those international flights to drop in. i don't know the details, but these are busy skies. jonathan: when we get more information we will bring it to you. as for the equity market, just a little firmer on the s&p 500. futures advancing. your next scheduled stop for equity markets, as well as cpi tomorrow morning. yields lower by five basis points on a 10 year. tom: services and goods. goods near disinflation. i have seen some charge -- charts dropping down on the edge of disinflation. you have to come back down to 3% normal.

i'm using that as a general statement. you have to get services down on a blended basis with goods. we are just not there yet. we make it a trend that gets you there, but we are not there yet. jonathan: let's talk about this trend last week. claims exceptionally low. payrolls decent. unemployment, 3.5%. softness in wages. maybe that reduction has worked. maybe that gets your attention. tom: the optimists look really smart going into a recession that is out there somewhere. jonathan: excited to catch up with chris verrone very shortly. this is bloomberg. ♪ future generations. ♪ welcome to a new era of flight.

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jonathan: coming off the back of a different day of -- a decent day of gains on the s&p 500. equity futures up by .16% on the s&p. in the bond market, head of cpi tomorrow morning, yields come back in by three or four basis points. the optimism around europe, you heard it a million times in the last 24 hours, have you? .95 at the end of september. up about .1%.

some stocks to watch in the premarket. all over the airlines right now. reuters saying the u.s. federal aviation administration system that alerts pilots and other personnel about changes to airport facility services was not processing updated information. the latest reporting is that all flights in the u.s. have been grounded. tom: i have a 400 number. jonathan: an faa outage. we are down on american by 1.6%. united down .5%. and southwest, for all its own troubles, here is potentially some more. tom: we aim to please, jon. they indicate real-time and abnormal status, impacting every user. concerning the establishment, condition, and a change of facilities and hazard in the system. they have a unique language using special contractions making communication more efficient. this is the inside language of

the faa that is down. jonathan: just got a tweet from the faa. the faa is working to restore its notice to air admission systems. we are performing final validation checks and reloading the system now. operations are affected. we will provide frequent updates as we make progress. the latest from the federal aviation administration. tom: they got an iphone and/or rebooting it. sounds like what they are doing. a serious matter with an estimated 400 flights grounded. not grounded is chris verrone, macro strategy. forget start test -- forget stochastics, trend matters. which trend chart right now matters? chris: it's a great question. when you look at the market in totality right now you could make two very compelling cases on both sides. take what i think are some of the problems with bull thesis.

i would say gold has been better than stocks. the largest stock in the world, apple, has broken down. and the yield curve is still inverted. what is the problem with the barricades? the problem is, caterpillar is at a 52-week high, and industrials all over the world are breaking out. we are in this very, very disparate market. 2022 was a monolith. i don't think 2023 is a monolith. tom: you know under set ups you can have a number of trends to confirm. this time he'll the confirmation wound? if i have a certain trend belief that i have, do i go out february, march, may to get a confirming trend? -- chris: i think the best trends

are in what no one owns. it is metals and mining. look at the breakouts we have seen in real and dhp and freeport. there is a message there. it is just a small part of the market that i think is wildly under-owned. if you look at the things people still do own in size, relative top in apple, relative top in microsoft. it is a very split take from that perspective. the bull market are in what no one owns right now. jonathan: i want you to tell me what you would sell. em equities, copper back to 9000. look at the banks in europe. up 42% from the july lows. it is not just the stuff abroad. high yields in the u.s..

what to sell, going through those things? chris: when i hear you describe that i think what you are describing is, money is coming home. capital is being called home. for the last decade you were only rewarded if you parked money in the u.s. when i look at u.s. market cap as a share of total market cap, it is topped. it is declining. there is a change where money is going back. you see that not just with the european banks, you see it with the japanese banks. you see it in the strength of the chinese mann -- chinese won. capital is being called home. i think that is a really important theme moving forward. jonathan: what do you say to people here in the united states, home who think we are one rate cut away from tech regaining leadership in the rest of the world? chris: i think all this focus on

the pivot is missing the actual pivot. the actual pivot is what happened in japan in mid december. the pivot is what is going on in china right now. look at the response to the equities or corners of the market related to those stores. the move in japanese banks, you are talking about a decade-long break out. that is how a market should respond to a meaningful pivot. the move we are seeing with these basic resource stocks would be suggestive of a major shift in china. when i look at the u.s., all this anticipation for a pivot, and you have rates down and you have dollar down, and the big weights are underperforming. i think the market is speaking clearly about what the real pivot is and what is the fallacy. tom: at strategas, if i want to express a belief in the recovery

of china and the pacific rim, how do you best express that? do you do it through an etf? chris: i think there is a couple of ways. certainly run etf strategies and try to capture the macro thematic elements of what's going on. i would add to that, the thing about china, i want to own something where i don't have to be perfectly correct on china. that's where i like these big basic resource stocks. i think the china reopen is part of it, when i look at valet for bhp i think there is more than just the china story. emphasizing, what are the best charts around the world? those are certainly high on our list. tom: tell me about the tech. they are still over-loved. they still have massive revenue growth. the profitable ones are going to

make margin. do you ignore them or hold them? chris: i think you still sell them. we are still early innings of what will be a multi-gear out of these stocks. it will have two phases. i think we have probably seen the first phase. the first phase was these names going down more in a down market. the second is more paralyzing. it is these stocks going up less when the market goes up. that was the lesson of 2001, 2002. big stocks went down more when the market fell, and they wind up less in the next bull market. jonathan: on the same day we had a 52-week low on caterpillar, that was the same day the dollar. i imagine you don't think that is a coincidence. what is driving what? chris: i think that is not at all an accident. the deflation of the dollar or

the popping of the dollar bubble, i think, is a big story for 2023 and beyond. in the short term i would say the dollar is over-sold here. we are going to put in a right shoulder in the dollar. i would be a seller of dollar strength. over the last 12 weeks growth investors in growth stocks have gotten every single thing they have wanted. rates down, dollar down, softer inflation -- and they have nothing to show for it. cold is up more over the last 12 weeks. that is a problem if you are counting on some change in the macro to be the catalyst for restarting of the growth bull market. jonathan: this was great. chris verrone of strategas. we have a new headline. just want to bring it to our audience.

united airlines, the flights are grounded amid this faa system failure. tom: thanks for your concern about brammo. she is in morristown. jonathan: is she trying to travel this morning? tom: she can't get off. it is there. united, we are going to hear from others as well. what is important here, folks, is i don't have any indication of the duration of this. do you? jonathan: no idea. tom: it could be 10 minutes, it could be whatever. jonathan: what we know so far is there has been a failure of a system operated by the federal aviation administration. nbc reported that all flights have been grounded. we are waiting for confirmation of that. united airlines flights have been grounded. you can see the moves in the stocks in the premarket. there is no real drama right now. on united we are down .5%.

on southwest, which has its own problems, southwest is down by 2.5%. to your point, tom, a lot of this is going to depend on how long this goes on for. tom: what i would suggest is, not the danger, but all the flights in the air. how many flights when this occurred are in the air? the answer is a big number. jonathan: this is a very risk-averse business. we get more information we will bring it to you. that is the latest from united. the stock is a little bit softer. if you are looking to travel this morning, reach out to your airline and work out what is going on, because i don't think a lot is going on, based on what we have seen so far. tom: we are going to have to see. there is still an airline bloom -- airline bloom. no one who is expert in this is talking to an end of the boom. one area is domestic business travel maybe hasn't come back.

but other than that, would you agree with me? jonathan: transatlantic business is huge. fantastic. the outlook for this year was great for some of these airline still. tom: but the stocks are going to come back. they have come back off of the pandemic, but there are people out there with real enthusiasm about people like united. jonathan: the latest headline from united, flights grounded amid the faa alert system failure. coming up next, freya beamish off the back of this monster china reopening story. should you be pricing in a growth rebound or a growth slowdown? which one is it? from new york, this is bloomberg. lisa m.: keeping you up-to-date news from around the world. i'm lisa mateo. flights across the u.s., being disrupted this morning because of the failure of a key pilot

notification system operated by the faa. there is no estimate for how long it will take to restore that system, and scores of passengers are reporting delays all across social media. in california more rain is on the way as a historic drought gives way to flooding. the storms are set to hit the state through the weekend. since the end of december storms have killed 15 people and closed highways. fixed income manager jeffrey gundlach says if investors want to know where interest rates are headed, don't pay attention to the fed. he says they should look at the bond market. fed officials indicate they expect to lift rates to more than 5%. the market suggests the peak will be less than that. wells fargo has announced a new strategic direction for an an empire that was once the largest in u.s. banking. will stop funding home loans arranged by outsiders and shrink the that's it services. back cap to years of efforts to

clean up a business that entangled wells fargo in lawsuits. shares of lvmh hit a record high today. the company named new ceos at two of its brands. the dior chief is the daughter of the lvmh chief. lvmh is already up 13% this year. global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. i'm lisa mateo. this is bloomberg. ♪

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>> when you see that the prices are going down you can expect that the consumer bills are going to go down. the debt is the key thing,

because that is what is driving inflation. that inflation is driving up in countries with automatic indexation. belgium is up, which is hindering our competitiveness. prices going down is good, but it will take a few months before the consumer will see it. jonathan: we are not out of the woods yet, is the message from the belgian prime minister. the futures just about positive on the s&p through much of this money. equity futures right now look something like this. up .3% on the s&p 500. yields come in four or five basis points. if you could bring up the airline stocks, that is getting a ton of attention this morning. southwest down 2.5%. united down by more than 1% this morning. united airlines temporarily grounding all flights off the back of this story that developed in the last hour. the failure of a pilot

notification system operated by the federal aviation administration. it's going to take a long time to work out what is going on here. tom: we are learning about this in real time. you're not any smarter than you are, folks. just one sentence, from the faa. did you know you should always check 25 nautical miles to either side of your full route to ensure relevant notams. there are flights up there and they are looking with a 25-mile perspective. that's what doesn't work right now. jonathan: the faa said on its website a hotline has been activated. this one is going to be a busy morning. maybe the morning some of you didn't want if you are looking to travel. joining us now is siddhartha

phillips. >> we have your -- we have learned that united has grounded all its flights. that is because of the failure of a key pilot system. the notice air system, which basically conveys urgent and important information that is essential for flight operations. the system is basically what keeps pilots informed about normal changes long their route. it is crucial for safety and operating flights safely. from what the faa has put out on its website, the system failed last night, and since then there have been no new amendments process. the faa hasn't really given us a timeframe on when it plans to restore the system. it's to -- it says technicians are working, but there is no estimate for when that might happen.

it has activated a hotline to mitigate against this. jonathan: how unusual is this? do we have any experience -- experience with this kind of thing? >> it is unusual for a system shutting down. it is crucial for airline operations. getting a back up and running is absolutely essential for pilots to be able to safely take off and land planes. tom: you have great experience in this, both in the united states and london. i'm absolutely fascinated by, and i'm on the heathrow flight path in, and i get that there is all the rules in the united kingdom, but the answer is, i'm seeing airplanes out there all over the place. do you assume as a pro that the u.s. system is superior to europe? is europe superior to america? or is it all the same, one big computer thing?

>> it is many little computers, but essentially the notam system is common across the world. it is something that is crucial and i don't think any system is superior to the other. this one is definitely a massive blow to the u.s., and i'm sure there will be some sort of investigation. jonathan: great to catch up. if you get any more information, bring it to us. no estimate on when the estate -- on when the faa will restore flights in the united states. tom: we will continue with our coverage and let you know about any of the headlines we see from our aerospace team in the united states. this is a very important conversation. it becomes more important with the surveillance news flow of the past two days. there are beginning to be estimates of a china recovery.

freya beamish is a chief economist at ts lombard and is borderline on the chinese economic experience. evercore isi fortis yesterday with a 6.2% recovery statistic for china ddp -- china gdp. can you get there at ts lombard? freya: not to that extent. we think growth will be in the 5% range, check think is above consensus. we have to be careful what we mean by consensus, because our estimates are coming off the lower base for this year. the statistics are not telling you the full details of how weak growth is this year. we had a contraction, and we are probably going to have another contraction in q4. we get above 5% next year purely because of the retiming -- the timing of the reopening and because of the base last year.

taking a step back and recognizing this reopening trait has got some steam behind it is a decent thing. especially when you take into account how low interest rates are in china. that means the retail investors will get in on it. they have space to buy into this trade. tom: how does that growth in china, that recovery diffuse across the pacific rim, and over to america and onto europe? freya: china is really the risk in a number of different ways to the global story. because it has decoupled from the shorter-term story of the reopening that china is having, much later than other markets. and then also because the secular story in china is at odds with the secular story in the rest of the world.

almost in a zero-sum-type of way. to the short-term story, the biggest, underappreciated risk from china is we have continued worries of supply disruptions in the short-term, while covid is still raging through the population. that would be a very serious thing, if it were to cause the price of core goods to start rising again. all of our forecasts, and i'm sure those of others, are based on the idea that the price of core goods is going to be flat or falling. that is what gets you to a 3% or 4% three month annualized rate of core inflation in the u.s. cpi by q2 of next year. markets are priced off of that. if we start to get supply disruption and the price of core goods fails to stay flat, that is a problem. that is not our base case, but

it is a significant risk. when you get to the reopening itself, i think that will prove to be disappointing. by all means now go for the tactical story. but when you get the data coming through in the middle of the year, and certainly toward the end of the year, i think the reopening itself will be disappointing, and the structural slowdown will start to make itself apparent further down the line. jonathan: i have 60 seconds on the clock. on the supply side, can i nail you down to understand your base case and the sequencing of a checkup see further dislocations off the back of this china reopening before we see supply-side relief? freya: it is not our base case, but i'm aware my own forecasts are extremely dependent on that price of core goods staying flat in the cpi in developed markets. if there was disruption to that,

that would be a problem. if we get the actual numbers on the gdp side in the middle of the year, that will be disappointing, because the consumer is -- does not have the kind of firepower behind it the developing market consumers do, and because the property market, the structural answers have not been provided by the authorities and how the property market problems are going to be solved. therefore all of this jubilance over the commodities, the art commodities that normally rally with china, play it for now, but when you get to the hard data be more careful. jonathan: seeing that in copper right now. freya beamish. thank you. tk, it has to be the story of 2023, china reopening. tom: i agree. the focus is on inflation, but on an aggregate basis there is no other story. jonathan: coming up, i daily research. we will catch up with him in the next hour.

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>> at the end of the day, we have circumstances where the fed is intent on reining in the labor situation. >> fire prices remain, the fed will raise rates and keep rates higher for a longer time. >> 25 basis point hike and the fed might pause from their. >> we are moving out of the regime into something new. >> inflation in the second half of the year in the picture will

look different. announcer: this is "bloomberg surveillance" with jonathan ferro, tom keene and lisa abramowicz. jonathan: live from new york, good morning. this is "bloomberg surveillance" on tv and radio. alongside tom keene, i am jonathan ferro. the federal aviation administration, a key pilot system disrupted air travel across the country this morning with united grounding flights to all destinations. the update this morning is on twitter. the faa is still working to fully restore the system. while some functions are beginning to come back online national airspace system operations remain limited. stocks of those airlines in the u.s. through this morning are

softer but no real trauma. tom: the trauma is the uncertainty and i'm getting different numbers. i do not want to quote how many flights are delayed. it is down. that is a developing story. [laughter] if you are at the airport, you are miserable. maybe not like over the holiday season with southwest, to be fair, but it is serious and it has to do with the logistical structure of the integrity of the country. jonathan: to your point, you asked, how long is it going to go on for? no idea. tom: shall we stand in the water in the ocean? go to the airport. jonathan: like a storm report. tom: let's not do that. jonathan: the faa, while some functions are beginning to come back online national airspace system operations remain limited. if i get the information, i will bring it to you. we also need to talk about the

market. we closed out 2022, and we will catch up with david malpass who has a good handle on global gdp growth, and that handle is not captured by many of these markets. tom: what is important is he was the optimist. for him to deliver sub 2% is painful. my headline off the data yesterday was the equity market really nudged through with the vix coming from a 22% handle. halfway to where it ought to be. jonathan: chairman powell did not say much. we are light on fed speech. maybe he wanted to wait for cpi tomorrow. tom: possible. jonathan: i don't know the answer to that. i might ask michael mckee. tom: maybe he is at the --

[laughter] -- there is a secret envelope. jonathan: edward yardeni joins us now, founder of yardeni research. what do you make of it, the rally that we are seeing in base metals and copper? edward: last year, there was a lot of talk of recession around the world. we started out last year with concern if the fed was going to tighten, fed inflation was going to be persistent, that the u.s. might fall into recession. there was a lot of chatter in the first half of the year when real gdp was down. but there is also talk about the euro going into recession because of the war in ukraine and what that did to energy supplies. china has been struggling with another wave of the pandemic. you put it all together and the outlook for the last year was

for the global economy to be weak. now the markets are signaling that the plunge in natural gas prices in europe suggests europe may not have a recession at all. with china abandoning the covid policy, there is a perception we may get a terrible wave of the pandemic for a few months but then it should abate and china should open. the outlook for the world economy is actually improving. jonathan: are these trends you want to ride? the rally that we are seeing? edward: absolutely, especially since we started out the year and ended last year with a consensus view that the market was going to go down and make a new low. the stock market would make a new low by the middle of the year. i think we may the low october 12. that was the end of the bear market and we are back in a bull market.

a lot of volatility, but the markets are telling us the world economy is improving. tom: apollo brings up the heart of it. the basic idea is we have been fixated on the level of inflation and now the market and the pundits and economists like you are switching to the first and second derivatives. the change of the movement, the dynamics of inflation, how does the fed adapt to that change? edward: i think the fed recognizes and is embarrassed by the fact they made a mistake at the end of 2021, early 2022, that they fell way behind the inflation curve. i think they are trying to make up for that mistake by possibly making another mistake. but i don't tell the fed what to do. i try to anticipate what they are going to do and it looks like another 75 basis points

in 25 basis point increments, even though the data suggests that is not necessary, and they will keep it at 5%, 5.25%. i have no problems with that. i think the economy is resilient. tom: that is the point here. if we get up into the 5% range and the key phrase from you is, "and we stay there," the world will come to an end as we know it. edward: that is not my style. i really think the world is going to come to an end. quite the opposite. i think we may be seeing a change from the new normal of unconventional monetary policies, ultra easy monetary

policies, we had from 2009 to 2021 back to the old normal. that would be great if we could get back to an environment where interest rates are not zero, where we do not have monetary policy buying bonds in bulk. i think that is what we are seeing. we are going back to the old normal economy which is able to grow with reasonable interest rates. 0% is not reasonable. jonathan: that raises leadership questions. where do you think that leadership comes from, both from a sector perspective and geographic perspective? edward: i think investors right now are turning more optimistic about the global economy and looking where values are still cheap. we have already had a big run in china and now they are looking at europe. i think it is a diversified portfolio makes sense.

the u.s. will do fine and the leadership in the u.s. will be industrials because there is so much money in the fiscal stimulus pipeline. we also have on ensuring. i am looking at manufacturing structures, building manufacturing structures at an all-time high in the u.s. i think you diversified. tom: what does trade do, x minus m? what are the export dynamics and import dynamics? edward: everybody is talking about on ensuring and production moving out of china back to the united states, or at least mexico and vietnam. the reality is the world has not changed that radically the past couple of years. if the u.s. economy is going to have no landing this year, which is a plausible case, i would say

it is included in the probabilities of soft landing which i put at 60%. that would increase our trade deficit. jonathan: amazing how quickly this conversation changed. it is january 11 and we are already questioning -- it is amazing. edward yardeni from yardeni research. the consensus is first have ugly and second-half better. tom: you don't need to hear this but years ago young ferro said, maybe the new year's outlook ought to be written march 31. jonathan: they should be. [laughter] tom: this is trophy taking your for that. it has been with all the resources our team has the last 72 hours. jonathan: if everybody gets fed up with us and we start our own research house, we are going to look back on the last -- tom: we would emphasize march

31. [laughter] i am waiting for spring training. i learned today the red sox do not have a short and second baseman. jonathan: what is happening with you guys? tom: i do not know the back story. i have my theories but certainly, the pros -- and i give great credit to the athletic further coverage. you line up x number of teams and the red sox are number one, number two, number three. jonathan: have they been throwing more money at it? tom: talk to bramo. jonathan: if you are tuning in, u.s. flights grounded after the failure of a key pilot notification system operated by the faa. we heard from united earlier this morning. temporary grounding all flights to all destinations. this is what we heard from the faa this morning. the faa still working to fully restore the notice to the missions system.

while some functions are beginning to come back online national airspace system operations remain limited. here's an update from the transport secretary. i have been in touch with the faa this morning about an outage affecting a key system for providing safety information to pilots. the faa is working to resolve this issue swiftly and safely so air traffic can resume normal operations, and will continue to provide updates. that guy has been a busy man the last couple of weeks. tom: they came out of the pandemic and they got a lot of aid and they're trying to get back to normal. jonathan: guy johnson joining us next. [crosstalk] tom: guy is tuned into this. jonathan: futures up 0.20%. >> keeping you up-to-date with news from around the world with the first word, i am lisa mateo. there has been a major disruption to air travel in the

u.s. this morning due to the failure of a key pilot notification system operated by the federal aviation administration. united airlines has temporarily grounded all flights. one tracking website listed more than 1100 flights delayed in the u.s. the faa is not estimating how long it will take to get that back on track. president biden says he was surprised classified documents were discovered in an office he used before he was elected. he says his lawyers did the right thing by calling the national archives which took possession of the papers the next day. congressional republicans are promising to investigate. ukraine's president is vowing his troops. russian aggression and he promises the conflict -- -- he said the tide is turning even though it is still not over. in the u.k., ambulance workers are on strike again.

members of the two unions are walking out as part of a dispute of pay. the public has been warned they may have to wait longer for emergency services. after years of scandals and multibillion-dollar losses, credit suisse is tightening its belt. bloomberg learned the lender is considering cutting the bonus pool for 2022 by half. that would bring the amount down to about $1 billion with some employees likely to receive no bonus at all for the last year. global news 24 hours a day on air and on quicktake by bloomberg. powered by more than 2700 journalists and analysts in over 120 countries. i am lisa mateo. this is bloomberg. ♪

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>> the entirety of 2022 we asked, when is the catharsis? when is the emotion? it is coming. you have so much stock of consumer savings and in that environment one might be able to argue you are going to have, i would not say soft landing, but not a crash. call it over 5% in the unemployment rate. you are going to have that backstop that gets you through the shallow recession to the recovery in 2024. jonathan: julian emanuel of evercore thinks the lows are in our future and not our past. good morning to you. here is your equity market right

now. equity futures shaping up as follows. the cpi around the corner. equities of more than 1/10 of 1%. our attention this morning on the airlines in america after the failure of a key pilot notification system operated by the federal aviation administration. we heard from united airlines in the last hour temporarily grounding flights to all destinations. the stoxx are softer. united down 0.07%. 70%. the faa says, they are working to fix the problem. while some functions are beginning to come back online national operation systems remain limited. that is your latest. tom: i have an expert. i started to dive in and read and it is a very tight system of

communication of the thousands of airplanes in the sky. it is not landing at new wark and i need to get to my gate, whiskey, whiskey, whiskey. it is, where are you in the air and where is everybody else? jonathan: whiskey, whiskey, whiskey is not the phonetic alphabet. tom: i thought they said tangoe this, whiskey that. [laughter] jonathan: i have seen you at the airport. i think we should do that. tom: let's talk to somebody informative. jonathan: guy johnson us out of london. you follow this industry. walk us through what you are learning. guy: you laid out the latest. i am not entirely sure we can get anymore in terms of information as to where we stand other than what you laid out from the faa. this is a mission-critical communication system between pilots. this is safety, this is hazards, this is the stuff you need to know and it is very time sensitive.

when this goes down it is a major problem which is why you have seen the ground stops. it will take a long time to get the system back up and running. it went out last night. they are beginning to bring it back slowly but the effects will last many hours beyond the system coming back. now we have airplanes in the wrong place, chaos across the system, and that is going to take a while. i would not have wanted to be the person that had to wake up the southwest management and tell them we have yet another problem. tom: just a general question for all of our listeners and viewers concerned. i can make jokes about it but this is serious stuff. i was coming into heathrow once over the field and there must have been a plane going up to edinburgh. it went by 1000 feet below us going straight north up to scotland or whatever. to those of us that do not have your knowledge, is the integrity of these systems rocksolid?

there is never any crashes, right? guy: there are crashes. they try to avoid them. midair collisions are probably a bad thing and you want to avoid those. yeah, the systems are fairly good. they could be better and this is something europe -- tom: describe that. guy: at the moment, it is not -- it could be -- aviation has been asking for a more sophisticated air traffic system for a long time in europe. it is part of the green agenda. if you can make the system more sophisticated, you can fly aircraft closer together, on better routes. there is a big environmental impact. there has been a safety update as well around all of that too. the systems are good, very good, but they could always be better. this is where you could potentially see investment over the next few years. but the other question i would

be asking this morning would be how vulnerable is u.s. infrastructure? how vulnerable is european infrastructure? that is a big question i think a lot of people will be asking themselves once again. how sophisticated is the security around the systems? i am not suggesting this is anything other than a system failure, but it could be, at some point in the future, caused by something else. that will be a question people will be asking. jonathan: getting another update from the faa. moments ago, the third update, the faa ordered airlines to pause all domestic departmental 9:00 a.m. eastern to allow the agency to validate the integrity of flight and safety information. what do you make of that? guy: it is taking a long time to get the system back up. my understanding is this went down about 8:00 last night. they have had problems since. i cannot confirm that but i have seen that suggested.

as i said a moment ago, this is a critical safety communication tool. it has to work. to tom's point, this has to work or bad things happen. they will want to make sure it is fully functional, everybody is up to speed. given the confusion there will not be you are loading extra into the system as well to make sure everything is, and can proceed, in a safe manner. i think the faa will be very careful on this. but the problem then is this is a critical part of the morning, midweek, a lot of aircraft are going to be in the wrong place, passengers in the wrong place. it is going to take a long time for the effects of this to be fully felt throughout the system. yes, it may take until 9:00 a.m. for the systems to get back up but it will be felt for longer. jonathan: and staff in the wrong place. you mentioned infrastructure.

we heard from the secretary of transportation moments ago on twitter. here is the update from him. he has been in touch with the faa and went on to say the faa's working to resolve this swiftly and safely so air traffic can resume normal operations. can you talk about what we need in the u.s. in this particular sector? guy: you talk to all of the airline bosses and they will tell you air traffic control has been one of the limiting factors in the united states and its ability to ramp up to pre-pandemic levels of transport and aviation broadly. i am including cargo and everything. there has been a huge problem with air traffic control in the united states having the capacity to move all of the

flights safely in the way everyone wants remains difficult. there needs to be significant infrastructure spending in this area, both in the united states and europe. but it can come with big benefits. you will not see aircraft being queued up. aircraft standing on the ground burning jet fuel is an area you could improve. routing could improve. the system could be significantly more efficient and the system could be significantly safer. this is an area on both sides of the atlantic that need spending and the airlines have been calling for it in the united states. it is definitely an air traffic control issue that has limited capacity. in europe it has been ground handling, but both continents are in need of spending in this area. you could spend a lot upgrading it. this area has not been digitized the way other areas have. jonathan: fantastic to catch up. guy johnson of bloomberg, the latest from the faa.

the u.s. faa told airlines to pause all domestic departures until 9:00 a.m. eastern to allow it to "validate the integrity of flight and safety information." tom: it is a timeline but the message from somebody who knows what he is talking about is it extends beyond that. you've got to get pilots from point a to b to c, the staffing and the luggage. it is not just 9:00 a.m. this gets back online. jonathan: it is 7:25 in new york. coming up, kathy jones of charles schwab. ♪ and it's easier than ever to■ get your projects done right.

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jonathan: pretty steady price action going into inflation tomorrow morning. equity futures look like this. up more than 1/10 of 1%. the nasdaq virtually unchanged. in the bond market, rally at the front end. the two-year yield is lower at 4.23. the euro-dollar shaping up as follows. we talked about that goldman call yesterday, dropping eurozone recession.

1.0731 right now. we have not had the ecb shift rate hikes yet. core inflation looking very sticky. that is the market. let's get you up to speed in the premarket for the equity story. we look to one sector, airlines. airlines are softer. american down 0.86%. the latest on that front, u.s. flights grounded, disrupted after a key pilot notification system operated by the faa broke down. the latest update we had from the faa is the following, and this is the third we have had this morning -- they have been very active on twitter. the faa ordered airlines to pause all domestic departures until 9:00 a.m. eastern. it is 7:31 a.m. eastern right now. airlines will pause all domestic departures to allow "the agency

to validate the integrity of flight and safety information." hugely disruptive to domestic flights. tom: and the players have limited working hours. strict laws on what they can spend on the ground and in the air. i have experienced that, as i'm sure our viewers and listeners have. if i have a 7:00 a.m. flight from wherever and i have to wait two hours or three hours, you wonder what the length of the day of the pilot is. are they going to be able to fly that aircraft even if it can fly? jonathan: everything ends up in the wrong place pretty quickly. even if you get a disruption that lasts two for three hours, it can -- tom: can we frame some inflation? jonathan: yes. tom: i expect you should watch the real yield weekly. the inflation adjusted yield is

1.35%. we are nowhere near pre-pandemic, or pre-gfc yield. we are getting distant from we are getting distant from where chairman powell would like to be on the inflation adjustment. jonathan: you think this easing is problematic? tom: it is not the outcome they want. people hinge it back to the labor market. we have a number of fixed income strategists that have been good about the assumed linkages. how linkagey are the linkages? jonathan: the fed governor had this to say. we have a lot more work to do. i expect the fomc will raise interest rates to tighten monetary policy, as was stated after of december meeting. they are not changing their view. tom: why should they? jonathan: they are saying the same thing again and again at the market is not responding to

it the same way it was. tom: there will be fed speak and when is the fed meeting? february 1? jonathan: the end of this month. tom: we are going to move on into but 5%ish range and that keeps the show going. one of the great supporters of what we do is kathy jones, fixed income strategist at charles schwab. let me cut to the chase. is this the year to clip a coupon? or can i find total return? kathy: i think you will get both. you will get some sort of return. we have been adjusting expanding yields around 4% and we anticipate capital gain going forward. but you have to look at medium-term and longer-term durations to get that. the shorter-term is rich compared to where the fed wants to go. but when you look at longer-term yields, that is where you have the room for that capital

appreciation. the tighter the fed is -- and this is something we have been talking about a long time -- the more it presses down long-term inflation expectations. tom: what are people doing at schwab? if i m in bonds and i have enjoyed -- if i am in bonds and have enjoyed those, should i switch to equities? kathy: we have a lot of people doing different things. what we have started to see recently -- there is a lot of people in cash. there is not a big shift to equities that i can see. but a lot of people are still reluctant to go out the curve and take on more duration risk.

we are starting to see that as volatility has settled down and it has become clear inflation is coming down. but there is more to go. there is a lot of reluctance amongst investors to take on more duration risk until they feel more confident that we are near the peak. jonathan: let's breathe more life into the story. if people believe there are reasons to send equities and emerging-market back into a bull market and send copper back, european banks up 30%, why aren't those same reasons a reason to send bond yields higher? kathy: yeah, great question. i think it is one of the emerging conundrums in the market right now. we have seen the risk on trades take off, and yet, we have not seen longer-term bond yields shift. i guess, and i can only guess

because i do not trade equities -- [laughter] -- i will not say what that idea is, but we have this idea of a soft landing. the worst case scenario did not happen because natural gas prices in europe came down because it is warmer. energy prices have come down. that has lifted the growth prospects and china is reopening. you have growth prospects improving but central banks tightening to keep inflation down. i think there is a push/pull here and we will have to see which side is going to win this. i still believe we have enough tightening cumulatively in the system that growth is going to stay pretty soft. jonathan: do you think we could get divergence? some real decoupling between regions experiencing different things at different times? kathy: yeah, absolutely. this is the first time in a long

time international bonds are starting to look -- the fed has been ahead of the cycle. that could mean that we start to see inflation abate and the dollar looks like it is weak for a while. that could mean that we get better yields opportunities elsewhere as we go forward into 2023. we might see some divergence, but limited. keep in mind, all the central banks are still hiking rates. tom: we are going to have to run to the faa but i want to tell you when chuck schwab tells you you could have a piano in your office, miss jones, liz ann saunders does not have this. [laughter] we have got the kathy jones piano in the office at schwab. kathy: it is a keyboard and i am

not in the office. tom: ok. [laughter] jonathan: what are you trying to start? tom: i think "surveillance" could turn to the white falcon. jonathan: i did not even notice that. tom: she has clout. schwab walks by and says, play me some rock-bottom. [laughter] jonathan: i think kathy wants to run. thank you as always. kathy jones at charles schwab. an update from individual airlines. tom: this is important because you called it a nothing tweet and that is the mystery. jonathan: this is what we have from american airlines. a nationwide system outage affects all airlines. we are monitoring the situation and working with the faa to minimize customer disruptions. if you are tuning in and wondering what this means, this is all we know from the faa. the faa told airlines to pause domestic departures until 9:00 a.m. eastern. what the team are getting

clarity on is does this apply to international flights? tom: you go to nova scotia and turn right and then wave. jonathan: i can only share the language from the faa. this was the third update of the morning. the faa has ordered airlines to pause all domestic departures until 9:00 a.m. eastern to allow the agency to validate flight and safety information. if you're just tuning in, what we had earlier this morning was an announcement of a failure of a key pilot notification system operated by the faa that has disrupted air travel throughout the united states. disruptive for travelers but maybe not for the equities. they are not massive moves. the price action suggests this will be temporary. tom: maybe it is a good study. i have been looking at the faa. huge plans, as an institution

does, to get us out five years, 10 years. i thought guy johnson's comments on the flight controllers -- i listen to him at newwark. it is a little low to be in tune with flight control, but when it does not break up this is intense stuff. flight controllers are doing what they did 30 years ago. jonathan: do you want the latest from british airways? tom: they are on top of it. jonathan: operations not affected. there might be some of you thinking, what is behind this breakdown? here is a tweet we are getting from the press secretary. the president has been briefed by the secretary of transportation on the faa system outage. there is no evidence of a cyber attack but the president directed d.o.t. to conduct a full investigation into the cause. the faa will provide regular updates. there will be questions asked. tom: they will. i got flightaware up and looking

at the limited flights into jfk. you know, i cannot read it the text is so small. jonathan: this is helpful. [laughter] tom: i think lax is coming into jfk. they have got to land but they cannot take off. jonathan: equity futures up 0.2% . the latest we have from the faa is that domestic flights keep saying that, domestic flights will be grounded until 9:00 a.m. eastern. ♪ lisa: keeping you up-to-date with news from around the world with the first word, i am lisa mateo. there is a major disruption to air travel in the u.s. the faa has ordered domestic airlines to halt domestic

departures until 9:00 a.m. new york time. that is due to failure of a key pilot notification system operated by the agency. the faa is working to "validate the integrity of flight and safety information." in california, more rain on the way as a historic drought gives way to flooding. three more storms are set to hit the state for the weekend. since the end of december storms have killed 15 people, closed highways and sent residents fleeing for their lives. wells fargo announced a new strategic direction for a mortgage empire that once was the largest u.s. banking. it will stop funding home loans arranged by outsiders and shrink the portfolio of debts and services. that caps years of efforts to clean up a business that entangled wells fargo in probes and lawsuits. shares of luxury goods hit a record high today. lvmh named two new ceo's.

lvmh is already up 13% this year. at the golden globes, steven spielberg was a big winner. the veteran filmmaker won best director for "the fabelmans," winning the golden globes for best drama. global news 24 hours a day on air and on quicktake by bloomberg. powered by more than 2700 journalists and analysts in over 120 countries. i am lisa mateo. this is bloomberg. ♪

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>> it was a complicated year in europe and we want this war to end in the year to come. if you look at the economic

indicators, the fear for recession is diminishing and there are good reasons for that. first of all, the agreement on the gas price cap was necessary. and is a strong indication, in europe, we will not pay high prices anymore. jonathan: a better outlook for the europeans. good morning to you. your equity market looks like this. up 0.2%. yields come in three basis points. it is a quiet morning for the markets so far. i want to turn to the airlines to keep everyone up to speed. this was the latest from the faa. their last update, the faa ordered airlines to pause all domestic departures until 9:00 a.m. eastern to allow the agency to validate the integrity of flight and safety information. if you are tuning in, this is the latest after the failure of

a key pilot notification system operated by the faa disrupted air travel this morning. we are trying to understand whether this affects international travel. this from united. international flights into u.s. still operating. that is the latest. tom: my amateur take is primetime is 6:00, 7:00, 8:00 a.m. eastern coast. but right now is when they are trying to land. i made a joke earlier, do they fly to montreal? no, they're going to land. jonathan: this delay until 9:00 eastern. that is several hours. how many does it take to unravel the mess? tom: all day, all day. jonathan: it could take a long time. tom: empty airplanes in salt lake city or wherever, i am making it up, but i think it is going to be a thing. you have the headline from the president of the united states getting reassurances from the

treasury secretary. jonathan: trying to work out the cause. this is what we heard from the press secretary earlier. the president has been briefed by the transportation secretary on the system outage. there is no evidence of a cyber attack but the president directed d.o.t. to conduct a full investigation into the causes. anymore on this and i will bring you the headlines. the world bank expect gdp to increase 1.7%. what is key is this is half the pace projected in june. the world bank writing, the combination of slow growth, tightening financial condition and heavy indebtedness will weaken investment and trigger corporate default. urgent global action is needed to mitigate the risks of global recession and debt distress. that is the world bank story. david malpass knows this too, it is not the market story. the markets are trading the other direction. tom: but it does fold over to

the financial structure of any economic post-pandemic recovery. david malpass joins us now with the world bank. thrilled that he can do that. what i note that is so important is the linkage into china. your website shows the linkage of the world bank into china. what is your knowledge of any china recovery? david: hi, tom and jon. i was there in december. i think they were just beginning to digest this coming off of the lockdowns. the lockdowns were massive in china. changed the whole way the people went to the factory and got their groceries and that changed almost overnight. the future still has to be worked out as they have infections of covid spreading through china. one outlook would be that they

digest it and move into more production that would help the world. another is it takes them many months to absorb it. we will know more in a couple of months on china. but my big worry is the lack of investment going into developing countries. there is this big pulling back by those investors that were reaching for yield. they are re-examining all those investments and that is a challenge. tom: i would say in the history of the imf and world bank, there is no single leader like you who is actually modeled and guessed economic growth. do you have confidence in the data out of china that leads you to some form of cautious estimate of global growth? david: yes. the data coming out of china, you know, of course it can be criticized but i have made this point before.

if you think of what a real gdp number for countries like the u.s. is, it is a range of possibilities. in china, the same thing. it is clear they slowed down quite a bit in the third quarter because of the lockdowns. they had a really massive lockdown owing from shanghai to beijing. big production centers. those are coming off now. hard to know in advance how much acceleration there can be during 2023. it will help the world if they do. tom: i feel like i am talking to a market economist. malpass is going to hang up and walk away. [laughter] can a weak dollar save e.m.? if we get any form of metric moving strong dollar to weak dollar, does that assuage the worry we have about emerging market finance? david: no.

i think the best for the world is to have the dollar be stable and than other countries tried to have their own currencies be stable as well. that allows them to absorb new investment. i would be worried if we, for some reason, went into a weak dollar phase. that would reduce global investment. they would be worried about what the future would bring. that is not in our outlook. the euro and the yen have recovered some from 2, 3, 4 months ago. that softens the downturn of the outlook, but ideal would be if we can get a lot of new investment into the countries that really need it. that is the countries that have big population growth or low wages. they can use new tractors, new computers, new cement making machinery, new bulldozers, and that is limited right now.

especially in the poorest countries. jonathan: i would like to ask a supply-side question, if that is ok. we are tough on china and everyone focused on the demand-side. what is your base case? are you thinking about the supply-side seeing relief? david: both. as we look at the supply chains, they went through a bad phase a year ago. but that disclosed other weaknesses within the supply chain. china fills many of those and as the factor production goes back up as they get through covid, that will help in certain areas. i think we will see relief on some things, for example, fertilizer around the world. that has been in short supply. china is a major producer. but in other areas still these shortages because the capital is not flowing yet. and importantly is the asset

repricing that has to be done after you have come off the 0% interest rate environment. 10 years at 0% means you have got to work out the pricing of many assets. jonathan: david malpass, i think that forecast of global gdp got everyone's attention. thank you for being with us. david malpass, president of the world bank. we are following the story of a key part of notification systems operated by the faa, disrupting air travel across the u.s. the last update from the faa was that they ordered all airlines to pause to mystic departures until 9:00 a.m. eastern to allow the agency to validate the integrity of flight and safety information. there was a report from cps that departure has been extended to 9:30 a.m. the faa domestic departure pause until 9:30 a.m. we have not found that and i have not heard that from the faa. we heard from the president though about 15 minutes ago.

he says planes can land but they cannot take off. tom: they've got to get them down. this is serious stuff. i would assume they extend the distance between planes and the gap between planes, maybe one at 30,000 feet or 25,000 feet. but they have got to get the planes down and particularly, they have to get down international flights. jonathan: exactly. tom: something from perth, australia, that is 13 hours. jonathan: they're still in the air. tom: they are still in the air. jonathan: the press secretary said this this morning, the president has been briefed by the secretary of transportation. there is no evidence of a cyber attack at this point, but the president directed d.o.t. to conduct a full investigation. more on the story, coming up. equity futures hanging in there. this is bloomberg. ♪

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>> the market is just so accustomed to the fed ringing the bell. >> the market is probably incorrect in believing that there's going to be any sort of

material between 23. >> hawkish and is from the ecb and is from the ecb in the fed. >> the messages been more hawkish. >> if they want to be restrictive and hold, that is the definition of how you get to a deeper downturn. >> this is bloomberg surveillance with tom keene, jonathan ferro and lisa abramowicz. >> morning. jonathan ferro, lisa abramowitz, and tom keene. we welcome you. an economic and finance investment report tomorrow, but now, it is the nation still with planes on the ground. we are hearing more from the white house and the secretary of transit tatian and a beleaguered the faa. excellent the top. we've had the failure of an administration which has been all morning. the latest we have heard is that flights have been halted until

9:30 a.m. eastern time. this is according to the faa in a bulletin. the last tweet we had from them is that the faa has paused all the mastic departures to validate the integrity of flight and safety information. as for the president, think about the cause. the president says that the faa will have a sense of the cause. >> yes. i don't know where to go with that, frankly. there is a lot of snarky stuff on twitter, frankly. we don't need to do that. i would look at the speed of twitter in the is additions on twitter, and the one i just saw was 39 minutes ago. we have seen radio silence from the faa the last half-hour. >> what we are hearing from the president, and this is what we heard from the press secretary is a possibility that this was a cyberattack. they pressed it directly. there is no evidence of a cyberattack, directly. they are conducting a full

investigation into the causes. i gather that we will get that question a few times. >> to review that for international audiences and airlines, can i use this language? they are being accepted in american airports. next i will borrow the language. plays can land for they can't take off red that's what he said. >> that is good. lax, coming into jfk, that is one example of that right now. i want to do a data check and keep you up-to-date on what were seen. we are the a lot of verbiage out of the administration. futures are up 10. the vix is my major story. .2 yesterday with a good market. coming in 20.73. the singular feature is the accommodation of a 10th of a percentage point. 10 above zero. a positive statistic on the bloomberg financial conditions index. this has been extraordinary, and

many would say unpredictable. >> the 10 years at 358. we are below the highs of yesteryear -- last year. we are pushing for 80 on the intraday high. right now, we are up 4.25. we've come back in in the face of all of the hawkish talk from the federal reserve. the market has stopped listening. >> we are waiting to see here. u.k. aviation is unaffected by failure of u.s. pilot system. they have a strike over there, but i guess the faa doesn't fall into what is going on at heathrow. the latest at 930 a.m. eastern time. ultimately airlines we are told have no domestic departures until such time. >> we have to review china and what we've just heard from mel plastic. the world bank earlier as well.

this is an institutional guy. he can't get out in front of this as we've seen selective firms. >> you acknowledged the risk from china. going through one by one, there's a .5 gdp growth, and i think for the euro, he said something like euro, and for china, solo or two morgan stanley, looking for something. for that matter, from yesterday, 6.2. clearly, upside risks to the china look, and i have said this a few times it you can take the gdp outlook, and compare and contrast that to the price action of the last couple of months. in the end, in emerging markets, in eurozone thanks, in the commodity market. >> you mentioned european banks. the moon shot off the bottom. >> 40% off of those. have a look at the high yield spread. it is not screaming recession right now. they are tighter than they were a few months ago by almost 100

basis points. >> stay with us. our team in new york and london are monitoring the news out of aviation. we'll bring you those headlines. we are joined by sarah mayo. she is the chief investment officer at an of being. we will go over the aviation. what is your confidence in your outlook. i would suggest certitude or confidence has been shattered and the 10 days of january. wax the markets and fed disagree on the outlook, but we expect markets to tread water until we get to the two events this weekend. cpi and earnings it the whispers are that they will be better than expected. we expect moderate growth as we see a continued shift from goods and services. for consumers still are spending. is that enough to change course? i don't think so. there is a long tail of a positive interest rate hike and inflation. i am pleased to see growth is flat for this corridor, and we

are seeing margins declined, but revenue growth is still positive for the year. the question is, if we go into an economic slowdown, revenue growth cannot stay positive, and market valuations are pricing in an optimistic scenario. that makes me concerned about the rest of 2023. >> how do you allocate? >> it is fixed income. what is the allocation you choose to have right now? >> it is fixed income over equity. there is a more traditional equity like return for lower volatility, and a lot of that rake height -- rate hike is still too high. we have not seen a tighter monetary policy on earnings and on positive revenue growth that is not sustainable. fixed income looks better, and there will be high single digits to double digit returns and quality areas like investment rate, and its full bonds. ask are you more concerned about

earnings and once sector over another, or is this widespread? ask -- >> if you look at earnings, it is kind of similar to last year with energy leading with technology at the bottom. there are interesting areas within technology where you can see stronger earnings as we start to go through the cycle and areas are less cyclical. i still like software. there are semiconductor is with a inflection point. with our financials, we are not credibly positive about the capital market risk for larger banks. i like the retail banks. they are more protected and away from work issues. >> this is a massive cyclical story. tom and i have been talking about this all morning. you have a commodity market rallying with base metals. you have em equities at the bull market. we had europe at the top of the hour. european banks are at 47%. they believe in the cyclical story. sarah, i am wondering why they

are not shoving off the long end of the on market. let's take on duration and lower yields. the market is not screaming recession. >> short-term, you have a rebound in a lot of areas because china has economic growth, and where we get to. once we get past this balance, it is a sprung coiled with more over the last couple of years, and also, commodities 12 another story, which is renewable energy. cobalt and nickel are also being driven with renewable energy. i expect copper to double by the year 2030 five, and if you look at the supply of copper in the niceties come we've been cutting supply for the last 25 years, so there is in there. even with fundamentals, there is been demand strong for a while. some wiser tight and peak investment was in 2014. focuses on returning cash to shareholders.

the fontanelle story remains strong. ask that is the structural story. we stick on the cyclical one for a little longer? should we be pricing in a growth rebound off the back of china reopening lori wrote slowdown on what we've seen? what is? wax -- >> we are in a. where we are starting to see aggressive rate hike, and i'm more worried about that versus china which i think is a shorter-term play, and a shorter-term rebound as they get back to normal, but the main event of the year is going to be the amount of damage at central banks doing it to the economy. what is holding us up is the consumer and the employment markets. we are seeing consumers dip into saving rates to spend. implement markets have not cracked, but if the consumer and employment markets cracked, that is the recession story that you get, and the on winding revenue growth. market valuations are too high right now. >> sarah, thank you. just brilliant, as always.

a lot of people on either side of this. they believe this is a bear market rally abroad, but we are seeing is a head fake, encouraged by china reopening. >> i go back to the tried and true, and it's not that i believe or disbelieve in this, no one cares what i think, but the bottom line is that everyone is looking for catharsis. that is a widely held thought. i don't have a strong opinion on that, but what i'm looking at us the elephant in the room. china reopening. that's in every research note, and it was published moments ago. it's about china, and a global reopening. everyone is recalibrating right now. >> you think you can reopen the skies in america? the latest from the faa. >> just before 8:00, that was our last stop a. u.s. flights are being halted until 930 a.m. eastern time. >> i don't know what to say.

twitter is a powerful thing with all of the appropriate you follow the faa. they tend to be good at putting out the knowledge they have, but if you put yourself in their position, you don't want to open up and then shut down again. >> of course. this industry is risk adverse. no one wants to see them rush into this. it is highly disruptive for passengers this morning. not for the stocks in the premarket. not moving much at all. equity futures are up one third. from new york, this is bloomberg. >> keep you up-to-date with news from around the world with the first word, i am lisa mateo. as we've been reporting there is a number of major disruptions to air travel across the united states money. the federal aviation administration ordered airlines

to stop all domestic departures until 9:30 a.m. new york time. a key pilot information system failed. the agency says technicians are trying to restore operations. some systems have started to come back for an order to halt departures. president biden says he was surprised that can classify documents were discovered in an office he used before he was elected. he says his lawyers to the right thing by calling the national archives, which took possession of the papers, the next day. republicans are promising to investigate. the ukrainian president is vowing that his troops should stop russian aggression. he promises the conflict will not turn into world war iii. zelinski spoke by video to the golden globes ceremony and said the tide is turning in the war, even though it is not over. mortgage rates have dropped for the first time in three weeks. according to the mortgage bankers association, the rate for a 30 year loan fell six .4%

last week. that helped boost application which roads -- rose 5.1%. after years of scandals a multibillion-dollar losses, credit suisse is tightening its belt. the swiss lender is considering cutting the bonus pool for 20 by about half that move would bring the amount down to about $1 billion with some employees likely to receive no bonus at all. global news, 24 hours a day on air and on bloomberg quick, powered by more than 2700 journalists and analysts in more than 120 countries. i'm lisa mateo. this is bloomberg.

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>> we are in the process of homes, you are as well. we have talked about strengthening our supply chain so that no one can arbitrarily hold us up over the pandemic, and it will cause us to not have access to critical elements we need to do everything for so many other things. >> mr. president of the night states. the latest on air travel this morning for it a little earlier on, we had a failure of the notification system from the federal aviation administration and that led to the grounding of many lanes across united states. it was unable to work for domestic lights. this is the latest update. making progress in restoring. the air mission system following

an overnight out or -- outage. in atlanta, as well. due to air traffic congestion in those areas. we expect departures to resume at other airports 9:00 a.m. eastern time. that is the latest all flights are currently in the sky, safely and. >> i am very conversant with this. >> i wonder if the air traffic congestion is a quote to get the planes off the ground. >> what caused it? that is the question. the president said that. the faa expects to have a sense of cause. we heard from a press secretary earlier this morning who addressed the question directly and said there's is no evidence of a cyberattack at the white, but we will wait for an update. >> is good to see on twitter

that the faa has a flow here. the press secretary, 30 seven mexico, the faa, three misko, now one indigo for a tweet, we will look at those continued updates. we are ever moving, and there is a gentleman from arkansas, and he has been a good friend of the show in explaining his view on washington policies. he has not been an acquaintance with the faa. i want to go back five years ago, and you played a local domestic politics by getting the faa to commit to little rock and to commit to aviation away from what we talk about, which is north jfk and lax, as well. what is your confidence in the funding of the faa right now? are they underfunded, on target, or do we need to step it up? >> good to be with you. the faa has had robust funding. people know we have a fine air

traffic control system. i have no doubt they will get to the bottom of this, and if they need assistance or congress, they will be the first to speak up about it. we have had a great relationship in little rock to expand economic development working with our airport and changing the location of their traffic control cones. i have a great relationship, and it will help if we need to. >> we will see in the morning. you are trying to get through january as a republican, trying to get to february 1. our gas and an bloomberg surveillance, we have a serious mystery to what we observe in a small group of republicans versus an embedded gop in the house. describe the nascent relationship between the speaker , grizzled veterans like you, and the crew we heard from front and center a number of days ago. >> it was a tumultuous week.

it took 15 balance -- balance to elect kevin mccarthy. all along the way, we had attention to the 19 to 21 members who were holding out, but what about the 200 people who were consistently there, saying he was the best choice for speaker? for many, he was the only choice. that carried us through the week and i will say this. a lot is been made about what concessions have been made to get kevin mccarthy to speaker, they were not as dramatic as the news media coverage i have seen. ask do you know the concessions? there seems to be some mystery this morning. i saw an expert pundit say that it will all leak out eventually. his friend chill -- is friend chill aware of this? >> i was one of his negotiators last week with a holdout group, and the agreement surrounds

three things. first, a rules package, which there was only one change to the rules package which was approved the members of congress? there was a vacation of the chair, motion that was in place since 1910. all speakers face a vacation of chair motions except nancy pelosi. the second topic was the budget -- already we control spending. basic principles for reducing the budget deficit. the third and final category of things we agreed to was to make sure every voice in our conference was represented. that was no secret agreement, and everything that agreement has been made public in our conference meetings or by press report. >> i would suggest, respectfully, there has been a biden's vending spree, but there was a trump spending spree, and before that another spree, and there were sprees back decades,

and we are trying to find a rational fiscal path for this nation. can't that be bipartisan? are our actions on china? >> it needs to be, and you make a good point. the baseline for the congressional budget office as we will have one point i've trillion dollar deficits for the next 10 years under those principles spending measures that joe biden authorized and asked for in the last two years. it has been made worse, and i want to go back to the time were republicans and democrats both agreed that deficits were bad. >> i have a little bit of time left. how do we get back to scoop jackson and hhh talking to republicans? >> i think jodey arrington of west texas has got a group of 30 republicans and 30 democrats who are working on how to get back to budget sanity and that is the

smart way to do that. >> we have to go. >> we have to go? >> we have to go? question want to talk about georgia football in alabama. this is really important. we do arkansas is going to reign supreme, but simple now -- is george of the new alabama? marx don't tell anyone from alabama that. everyone has a red coat on for georgia. you have a great day. >> thank you so much. ask we want to keep everyone up to speed with the faa. this could be over in the next hour or so. the faa is making progress in restoring the notice to air mission system. departures resuming a neurotic -- at newark and in new jersey. we expect departures to resume in other airports at 9:00. that is 36 minutes from where we are right now. >> that's good news. i take the point as was mentioned that it will take a while to undo this, but i have not seen this anywhere. i 12:00 is it all clear?

possibly. >> it could take longer than that to clear things up. get your staff in the right places. it is usually disruptive, but very disrupt the for airline staffs for most of them. >> may i editorialize? >> i don't think you need my permission. >> with all of this uproar over crypto and musk and twitter, this is what twitter is about. this is where people go. next you know what the problem is? let me give unit example. as a journalist reporting on this, we had tweets from the faa. for the first time in a long time, i was nervous about using a verified account on twitter. i was unsure as to whether that was actually the faa, that is the problem with the new verification system over a twitter. >> i agree in the strongest terms. that is the damage we have seen. a blue little tag like the faa,

and there is an orange tag, and yellow tags, and i am confused by it all. >> a lot of people are, and that will take time to clear up. we see all this works out. still only a couple of months into his tenure. >> us give him a year. let's see how we are on the other side of this. >> 2022 is exhausting. >> he has his own pressures, and lucky for him, it is no longer a publicly traded company. you can make a different decision set with a private company, but he has his own market pressures and we have discussed them. i'm done. we have to run. >> ok. if you're for 9:00. who you have? morgan stanley. >> this was fun. see you tomorrow. >> yes. futures are up 14. good morning.

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>> good morning. on radio, television, jon ferro is getting ready for the 9:00 hour. lisa abramowicz is off, and we have a national moment with the shutdown of the faa. planes are grounded across america, but a good stream of good news over the last number of minutes. we are monitoring communication we have seen from the faa, and that is twitter. that was the last comment we saw. the faa is making progress in restoring the monitoring system

for planes in the sky. newark and atlanta with congestion. departures resuming at 9:00. that is a little different than the tone we had half an hour ago. the story is active. we will give you an update on the international flight landing in the united states. futures are up, and a nice lift to the market. we are seeing it with a further accommodative policy, and we need to blend in. the economics and the markets can do that with the u.s. economist. and we have seen her live the economics. you have to observe the phillips machine. it is a strange linkage of employment with inflation, going back just after world war ii.

you are quality here. is there still a position in place? >> the trade-off between inflation and the labor market is always going to be in place. sometimes the relationships can go upside down, but i think that the link between the tightness of the labor market and how that affects consumer prices is there, and we are seeing that because throughout last year, we had an extreme tightness in the labor markets. a lot of vacancies and not enough workers to feel the jobs. >> are you advising portfolio managers that finally, the employment market will rate higher unemployment rates? >> i think that is down the line for the u.s. economy, but not just yet. we are observing a very interesting dynamic. a real conflict between the ism

and survey data that say a recession is imminent. the labor market is pointing to a deceleration, but not a dramatic one, saying that the dynamics may set in place further down the line, and really, we are watching data right now with temporary help. that is a cyclical companion, and the release is for first workers to be let go, and that has already started to cool, and i think that is a step in the right direction if we are worried about type miss -- tightness in the u.s. labor market. >> if you had a bite sized shop managing major institutional money -- we have seen in the pond and tree, a shift from recession doom and gloom to literally, and six to eight days, the opening of china and the accommodation. how do you handle a shift advising people who are running

such stodgy money question mark >> i think if you are a big institutional investor, you have to keep your eye on the trend and have conviction about where you see the economy going 12 months. we look at consensus, there is a pricing of the goldilocks area. there is a 50 basis point touched by the end of the year. market has strong convictions and recession, but this is not how they reacted recession. in the consensus picture, at the end of 2023, the risks are to the downside. the key is the timing, and in the u.s. recession, it's all about the consumer and the labor market. >> what is the value of inflation right now. i've been choking there is super court inflation on thursday, we are down to parsing out parts of

inflation, and even chairman powell is brought up these services. a few bought it, or do you look at the aggregate numbers? >> i am all about desegregating. i look at the detail data and level, and i think that matters a lot for the near term. i by this story because we have to understand that some in play shouldn't proponents are idiosyncratic, and some have a lot of inertia like rent and shelter overall. it is important to look at poor services. that is down to 1%, three months annualized from a peak of 13% last summer. i think inflation is slowing. it is just that we need to see these anymore sustained basis, and for the fed that has been burned so badly with a transitory story, i think it makes so much sense to be hawkish for a while, but to see

a dovish privet it will be quick. >> this is something. i will have to continue with this because i am with disaggregate inflation and get yelled at by any number of people, it should be one aggregate statistic, but you are with us at price. we continue to monitor the airplanes on the ground across america, and no recent news from the federal aviation administration. 16 minutes ago, it was what we saw in the latest tweet. a communication from the faa. 9:30 a.m. was the number bandied about an hour ago. we've shifted that to 9:00 with some form of departures in atlanta and at newark, just to the west of merrick city in new jersey. we continue with our guests right now. i love the idea of disaggregating inflation. but can you disaggregate housing? >> he repeat the question? >> i cannot hear you.

>> i'm sorry. matt, -- ok we are continuing with you. can you take housing out of the inflation dynamic? is it a separate pandemic beast? >> i think you can and you should right now because it is really driven by what happened in the u.s. housing market. we had a big battle in u.s. housing, and we also didn't overbuild or build enough relative to demand, there are some transitions happening right now where housing became so expensive and unaffordable that more people rented rid also, there was a geographic shift from the metro area to smaller metro areas in suburbia. in all of that with the housing market and rent prices in hiatus, we are due for a modernization. i expect that to happen by the end of quarter two, and it will slow significant. >> thank you so much.

we greatly appreciate that it most interesting as we go to the inflation report tomorrow. in our universe of 19,000 bloomberg employees, you try to find someone that knows the faa cold. we tracked down alan leven in washington, who is an expert on aviation safety and their systems as well. alan, i will play the dummy and you play the smart guy. when you hear this news, is it just to software collapse, or is theirs -- or is there more than a software malfunction? >> at this stage, the folks at the faa don't know exactly what caused it, we are told. we are also hearing that from the white house as well. they also say there is no indication that there is some sort of cyber attack or something like that. historically, the faa technology

systems are fairly fragile, but in recent years, we gone a lot better. this is a little bit of a surprise, and it's one of the worst outages in recent decades. >> software, we talked about the pentagon using ibm cards from another time and place in the modern age. would you suggest that the budgeting and software computer build of the faa is modern or is it dated? >> i would say it is largely modern. there is a time from a decade or two ago that there is old technology, and they cannot just turn off the system. they have to keep it running, and all of the functionality has to be super high level. but i will say, the updated,

up-and-down system, the past 10 to 20 years, they have gone to better communication lines, newer digital radio systems, the whole thing. it is relatively updated. >> this is really your forte here. on the politics of the faa, i can't believe i'm saying this, but is it what nicole, or do they have a bipartisan support in congress for their budget request. >> they are always partisan issues that come up, but by and large, this is one of the more bipartisan committees that handle the most bipartisan, and there is enough of a national interest to maintain the air traffic system.

it is typically not political. >> what is your number one question this morning as you begin the washington day? the washington day begins at 930. alan slides into the office at 9:30 a.m., unlike our early morning in new york. when you slide into the office, what is your number one. city about your the faa? >> we are just trying to figure out what might have caused this tree it is their underlying on the system, or was there a cyberattack? that doesn't appear to be the case. then, with the impact, there are already going to be resuming services in the busier parts, as you mentioned. this has been a huge impact this morning, but it could turn around pretty quickly, and it will end up being less of a impact on travelers that we saw

during christmas. >> thank you so much for interrupting your morning here. the faa crisis -- this is our bloomberg news with an expert on airline safety. futures are up 12. we are steeled for super court thursday. important inflation report. we will have a conversation across bloomberg television and radio all through the day on the guesstimates and the dynamics of the inflation call. we should point out that it is a burgeoning china as well. david rubenstein having a conversation. the comment from carlisle and conversation tonight. this is bloomberg. good morning. >> keep you up-to-date with news from around the world treated this is first word with lisa mateo. as you've been hearing on surveillance, airline departures across the united states are starting to resume. after a major disruption, the

federal aviation administration says flights are getting back on track at airports in atlanta and newark. the faa had halted departures after keep pilot information systems failed. the white house says there is no evidence that that failure was caused by a cyberattack. bloomberg has learned that tesla is close to sealing up a pro luminary deal to set up a factory in indonesia. that would allow elon musk's 11 -- electric carmaker to capitalize on metals used in batteries. the plant would produce as many as one million cars a year. wells fargo has announced a new strategic direction for an empire of mortgages that was once the largest list taking. it will stop funding home loans arrangement outliers. that caps years of efforts to clean up a business that entangles wells fargo in regulatory probes and losses. shares of luxury goods hit a record high today. the company named a new ceo at

two of its brands, it louis vuitton and christian dior. the new chief is dell fiend arno . she is the daughter of another chief. they are up 13% this year. global news, 24 hours a day, on air and on bloomberg quicktake, powered by 2700 journalists and analysts in more than 120 countries. i'm lisa mateo. this is bloomberg.

>> i think today, probably 80% of congress understands the basics, and they understand the potential of the technology that has a lot of innovation that we

want to preserve. but it also has some risks, and it is attracting some bad actors to come into the industry to profit on it, so they recognize the balance and need for regulation to preserve the innovation potential. >> brian armstrong of coinbase, and this is very interesting. tonight at 9:00, if you care about crypto, this is truly a must listen. he is the chairman and ceo and cofounder of coinbase and far more importantly, as mentioned, bad actors by all accounts, he is literally the good actor in bitcoin land and coinbase land. we are watching what is going on with no real news and the faa. southwest airlines mentioning their services and schedules need adjustment, but we await the faa. as we near the 9:00 a.m. point, some confusion. we are at 930 a.m., but maybe in the next 12 minutes and new

york, we will get further information. david rubenstein joins us with carlisle, and the host of peer-to-peer conversations with a really important conversation made more important by the news flow in the coinbase world. this kid is from palo alto, from engineering, and he took one of the great double degrees in america. rice university economics and game theory. he did the right things, and his company is now falling apart. >> i would say it is falling apart. company is publicly traded, and had a market cap that it was probably about 90% what it is today. but the company has real revenue. the company is laying off some people. and sling of 20% of its work or's, and it previously laid up 18% come but the company is regulate by the company is a very large company that does -- deals with trading of bitcoin

and other cryptocurrencies. it has a real business and real revenue, and it seems to be doing the opposite of what ftx did. it doesn't trade for its own account, doesn't have its own coin or token it created. it is much different than ftx. it has been hurt by the ftx challenges. >> what is your take on this russian mark as you talk to brian, the concentration that eisen amateurs see with binance as well. do you have a strategic ability to recover? is there a coinbase difference because of mr. armstrong? >> brian is a very smart person, as you point out. he is an engineer, and his parents were engineers as well. they were involved in computer software. he is a highly focused person, and he has will take good company which has now caught in a maelstrom of the problems that ftx has, but his company has real revenue and a real purpose.

if you want to buy a cryptocurrency, you can do it through his company and it is regulated by the publicly traded regulations. it has gone down a fair bit, but that is not unexpected. a lot of companies are going down, a lot of crypto companies are going down as well. next did he speak of his future and the linkage to the underlying? i will use the price of bitcoin from 50,000 on down to a present 17,000. what is the price of bitcoin, critically to the path forward? wax i don't think the price of it coin is important is the volume. people go in whether it is higher or lower, and that is not as relevant to him, just like the nasdaq or the new york stock exchange. he is providing an exchange for cryptocurrencies, and that is well-run. clearly, he is now reducing headcount because volume is down a bit but i don't think it is a company that will fall apart. it is much different at ftx.

>> what is the opportunistic moment for private investors such as carlisle? i don't need the family jewels, but in this chaos, is there crypto opportunity? >> carlisle is not a buyer of crypto related companies, but i would say generally, the technology market, it is down 30 or 40% from some of its leading companies, and therefore, if you are a value investor or you want to buy something cheap, now is a good time. the best time to buy things is when there is a lot of blood in the streets, and in the technology world, there has been blood in the streets, and in the world it is worse. if you are a value investor and you look at buying things cheaply, now is a good time to invest. >> david, i must take a moment with critical headlines. the faa's 10 ms. ahead of schedule. the federal aviation administration says normal air traffic operations are resuming. gradually across the united

states, the ground stop has been lifted. that is moment to go from the faa. we will look for a follow-up on that as well. you have public service in washington. how has the faa treated washington? it is not the pentagon, it is not the state department, but it is something we use every day. >> the faa doesn't get as much money as it would like in the system of air traffic control, which is different than what we are talking about today. the overall system has taken a long time to fix and make more modern. i think the faa could use more support from congress and from the public in terms of its needs to modernize what it does. >> remember the moment years ago when president reagan made a splash by standing up to union members in towers to land the planes? are we still card -- scarred from that moment from 40 years ago when ronald reagan said to

flight controllers, no, we will not back down. >> you and i might be the oldest people who remember that, but that happened in the 1980's when there was a strike at the air traffic controllers and president reagan fired all of the controllers. the system continue to work. that system is dated a bit, and we could use modernization. but i don't see any strike in the future, and the way ronald reagan handled that probably dealt with that problem for some time. >> one question. in a statement on the shift we've seen at bloomberg surveillance, just in the last four or five days, do you and carlisle, with all of your resources, do you believe in a chinese recovery to five or 6% gdp, a renaissance of the pacific rim rim, post-pandemic? >> it is a mistake to bet against them at -- chinese economy. they are recovering from the covid situation, but counting

out the economy is a mistake. people have underestimated the economy over the last 30 years, they've generally found out they were wrong. >> thank you so much. this is important when they filmed this with mr. armstrong britain was supposed to be important, but is ever more important. david rubenstein with brian armstrong of coinbase tonight. that is tonight at 9 p.m.. crypto on bloomberg will follow through on this with their interior reporting through next tuesday as well. i like to spend some time on radio and tv on the market dynamics we see as we see a lifting of the drama this morning from the faa. the faa, before 9 a.m., says they have a ground left. i will let you describe what that is. look it up. normal air traffic efforts have resumed. it is update five. they have communicated by twitter. thank you, mr. musk. we are resuming gradually. across the nice days, following overnight outages of their

system it provides safety for the flight crews. as rubenstein mentioned, that distinction has been lifted, they will continue to look at this. fred chill of arkansas said this was a well modulated staff. we think alan leven, our expert bloomberg on air safety for his comments as well. he made a very clear comment about the enormity and gravity of what we've seen this morning. in the data, we'll get equity bonds and commodities reddit it is really simple. you see yields coming in on a solid basis. this is within accommodation for the bloomberg financial conditions index, out to recover highs more accommodative in a positive statistic, and futures in the equity markets show that buoyancy. futures are up 110 on the vix. a big day yesterday with 22 down to the 20 level.

20.68. jon ferro is looking at foreign-exchange. i will call it a turn in the foreign-exchange exchange market. sterling 121 .07. brent crude deserves careful watching. gold is lifting up, not to 2000, but gold moving up in the commodity space with copper. $18.82. i don't quote copper on the bloomberg for you, but $82 on brent crude really deserves focus here to see if we finally get oil moving with what presumes to be a chinese opening. much more today and forward to this incredible and interesting inflation report that we will see tomorrow. this is important. andrew griffith of the night kingdom, financial secretary to the treasury in the 12:00 hour. ramifications of u.s. inflation one in. to stay with us on radio and

television. good morning.

jonathan: trying to build on yesterday's gains, a rally. the condemned to the open starts now -- counts down to the open starts now. >> this is bloomberg: the open with jonathan ferro. jonathan: live from new york,, between optimism and gloom, china's reopening