dani: good morning.

this is "bloomberg daybreak: europe." i am dani burger in london and these are the stories that set your agenda. stocks are higher and treasuries rise before today's expected deceleration in u.s. inflation. china shares waiver after a sharp drop in ppi. 100,000 u.k. workers have plans to strike next month after unions signaled they are far from resolving disputes over pay. plus tsmc tops estimates but concerns linger over economic headwinds and tighter u.s. trade goals. happy cpi data all who observe. we are expecting softer numbers but we get this pre-big data shuffle happening in the markets, so not too large positions. what has not been clear as the diversions between the bond market that is pricing in recession and risk assets that

continue to rally. perhaps the rally is because they are expecting fed cuts, but can risk assets continue to do well if the economy is doing so bad that the fed needs to cut rates? we continue to see treasury yields fall. they have fallen by about 10 basis points over the last two days. we are just now at 3.5%. the dollar also pricing in a similar scenario. the dollar is at its weakest, i wrote it down somewhere, since july of last year. it continues to get that downdraft from concerns on the economy of what the fed will do. the one assets that appears to be moving on a concrete piece of news is the yen versus the dollar. we do not have jgb futures up on here, but they would show you the biggest downdraft since may 2014. meanwhile, the yen continues to strengthen, up 0.6%.

there are local press reports that the boj will be examining the impact of widening the band of why cc, so perhaps that is more indication that they will exit easy policy, but they are just refusing it and seeing if other tweaks need to be made. looking at the equity markets, that continues to be strong. u.s. futures closed yesterday at their highest in one month. asia-pacific, the highest in about seven months. china is a bit weaker today, the one downdraft in here, the one force dragging it down. meanwhile, bitcoin with a strong day. it is now back up above 18,000 for the first time since that ft x debacle started. for some reason a bullish day for bitcoin. the big story is uscp i do later today. -- u.s. cpi due later today.

let's bring in our bloomberg economy editor for more on this. what will the inflation numbers tell us about the fed's moves from here? jill: that is the big question. right now we are expecting that the volatility with energy costs will come in at about 0.3%, higher than what we were seeing in november, but nowhere near the levels we were seeing in terms of percentage points earlier in the year. we want to figure out whether or not the fed is going to -- we know they will continue to raise interest rates, but will that be by 25 basis points, 50 basis points? economists are breaking in that 25 basis point move, so that'll tell us whether that will happen, or if fed officials have been telling us the past few weeks that they have been considering a more aggressive pace. that will come with what we get out of these figures today. dani: we also had china factors

-- figures coming in stronger factoring inflation. this does not seem like the end of factory deflation in china. it will prices start to pick up this year? jill: we have inflation numbers that were deeper than economists were expecting, but that is probably a couple of factors there as right now we have high rates of comparison from last year were commodity prices were rallying through the roof but also the end of covid zero has created all kinds of economic chaos in china right now. we are still figuring out that situation right now but what economists are generally thinking is that we are seeing some price pictures -- price pressures pick up the second quarter into the next half of the year. dani: thank you so much. that is bloomberg's jill disis. blackrock has revealed plans to cut 500 jobs.

it becomes the latest financial institution to make major cuts with rising economic uncertainty weighing on firms who are trying to aim for more profitability. joining us now is bloomberg's stephani a become key -- stephani a bianchi. is this a new paradigm for the financial sector? >> it is only the beginning of the year and already we have had a flow of news from job cuts from some of the biggest financial firms. blackrock is the most recent one. they are cutting about 5%. this is their first pullback since 2019, so really highlights the challenges that some of these big financial institutions are going through. last year was a good year, but now people are warning about what could come in 2023. dani: a lot of folks who used to have bonuses intentionally worried about their jobs now.

thank you. let's talk tech now and tsmc has pushed a beat in the fourth quarter income despite the global downturn. for more on the numbers from the world's largest chipmaker, let's bring in tim culpan. you have been watching these numbers closely. it looks like tsmc believes the size and scale will help it beat some of the downbeat trends in the sector. will they be able to beat those trends? tim: they are betting on it. they spent 36 billion last year on capex, which is a huge number. right now, the tsmc call is going on and we will find out what they expect to do in 2023. the fourth quarter that just ended was not great relatively speaking. they missed their estimates on the top end and by the bottom line their margins are amazing. their clients very much need them despite all of the macro economic problems we are seeing going on around the world.

they do feel confident that this year will be good for them, but it will be a dip over the next few quarters. we are looking to see from them how bad that dip would be and how long it might last. dani: you mentioned that tsmc is spending up to have that advanced technology that they think they have an edge. i wonder if the trend is different for the rest of the industry. i think of samsung's earnings where profit dropped by a sizable amount and there was a lot of talk among analysts. do they need to cut back on capex? do they need to lower output? does that seem to be the trend for the rest of the chipmakers? tim: the thing with samson is they are the closest rival to tsmc, but so much of samsung's commodity chips are in the commodity space. when things are really good, they have invented in that space, but when things are weaker, it falls apart quickly. tsmc goes is in the opposite

direction and says we will spend a gazillion dollars, going all out on technology, doing this great stuff, and we bet we will be the only people who can do this and you will need it come rain, hail, or shine. despite the fact that forecast was weak, shipments fell from the first quarter. their average price actually increased 5.6%, so they have pricing power, which tells us they have the technology and an offering that clients will need even in weak economic times, and that is what they backed going into the future. dani: thank you for taking the time. i know you have got to get back on that call. join us and tell us the results. bloomberg's tim culpan. let's take a look at other key things we will be looking out for today. 9:00 a.m. u.k. time, the ecb will be releasing its consumer expectation survey along with the latest economic bulletin. then at one p.m., we will have

data from the u.s., the key cpi reading for december as well as the initial jobless claims figures. later today, we will hear from a couple of fed members, james bullard and thomas barkin are both due to speak. will they be hawkish? how will the cpi affect things? also 1:30 a.m. u.k. time on friday morning, we will get the latest figures from china. and remember, it is all about cpi today. coming up, traders from london to new york will be glued to their screens waiting for that u.s. inflation data. we will discuss what to expect and how it impacts markets next. this is bloomberg. ♪

>> i think we need -- on october 12, that was the end of the bull market, and now we are back in the bull market. the markets are telling us that the world economies are improving. dani: ed garg he talking about the stock market in 20 sees as an ongoing bull market resumed -- stock market and he sees an

ongoing bull market resumed. joining us now is anita gupta. he says we are already is in april market and would you buy that at all -- a bull market and would you buy that at all? >> last year we saw two catalysts for the bull market to start rallying. now we do not have a fed pivot, but the market is pricing in the fed stalling raising rates sometime by mid-2023. we definitely have the china reopening in spite of the latest covid cases. i q2, china dimension start picking up and that has been a game changer for global markets. we have the very important cpi reading out in the u.s. today, and that is also going to be a big catalyst for markets with headline inflation expected to tip down from 7.7 26.5%.

today's inflation data could predict the future of markets. our take is that this year we will move from inflation to corporate margins. corporate margins is what is going to take the path of equity performance. dani: you are just reading my mind because i wanted to ask you both about cpi and about earnings. i want to unpack a bit of that, perhaps starting with cpi. if we get a surprise, be it to the upside or downside, how would that change your approach to this equity market? anita: very definitely, inflation was the biggest catalyst for equity markets last year because of the fed's corporate margins. this year, what is happening is that inflation is moving from goods inflation to services inflation and there is no doubt that services inflation is sticky currently. wage growth is high.

if you look at the airline industry, they are seeing passenger growth, higher passenger fares. restaurants, there is demand for staff, so services inflation is sticky. that is a worry that the impact on corporate margins will come from higher wages. the pressure on upward margins is from lower demand. what is happening is that higher inflation is impacting demand. that is what central banks wanted and they are getting at, but that also impacts corporate earnings. earnings dipped down in q1 and q3 of 2022. the outlook -- 2023, we have been moving at a flat earnings course on the s&p 500. dani: if earnings are going to struggle, where do you turn to?

much has been said that 2023 is not the year for the u.s. but for a global market. do earnings look like they could hold up anywhere else around the world? anita: our outlook is the developed market earnings will be flat ranging from the u.s. to europe. where we do have a lot of potential upside is emerging markets. emerging markets is china with the largest weight in the csi index and you have india which has grown almost 48%. china, we have already seen plans, the latest economic plans which want growth to pick up, and that is going to reflect on the earnings. china also has untapped consumer demand with the lockdowns. that consumer demand will come into play so we are positive at this point in emerging markets this year, which includes both

china and india. india we see a secular earnings growth of 20% over the next three to five years. india, consumer demand is very robust. india is also a very large, untapped market. if the two biggest markets in the emerging markets have high economic growth and high earnings growth, that is where we see potential upside in performance. dani: the china story, you mentioned that as the reopening impulse to help emerging markets. it is well broadcast at this point. how much of that story has already played out? anita: i think we are somewhere in the middle of that story because we are yet to see inflows come in a big way to china equities. while we do have the short-term upward impact of the china reopening and they expected a resumption of demand, what we still have is china's tech

policies. china has added a lot of stimulus in the real estate sector which was ailing, but that does not take away from the fact that china real estate demand is down 24% from the last quarter data. we will look at china as a mixed bag and we will watch it very closely. part of the story has already been played out, which is why i highlighted that inflation numbers, profit margins remain our biggest catalysts for the future of performance. dani: 2022 when i think about it, it was a year where the macro overtook the micro. everything was moving on inflation on the fed. when you say we are going to focus again on margins, is that environment over the most important thing investors need to be looking at is that macroenvironment of monetary policy and economic data? anita: monetary policy is around demand.

we are getting mixed signals. there is, of course, recessionary talks and the macroenvironment is predicting recession. however, if you look at what the corporate's are saying, we have the q4 earnings season starting now this friday with a big banks paid everyone is watching about what the corporate's will say about the earnings growth. corporate's always are the precursor to what happens with economic growth. what's the big banks are going to say, we expect they are going to talk about deals from lending. we are seeing a decimal m&a environment, little issuance from the western economies, u.s. and europe, more so than india and the uae. what's the corporate's say in their guidance, the little giveaways that we have seen, those are giveaways as to what is happening in the real

economy, what is happening with global demand. they will pass on the cost in terms of revenue raises, price increases. this is why the corporate smatter -- corporate's matter. dani: thank you for your giving your thoughts this morning. i want to get a quick check on jgb futures. they fell significantly, about 43 tips this morning in the japanese session. this follows a local report that the boj may tweak policy further. the speculation is that it will be towards normalization, the report specifically is that they are looking at tweaks around the impact from the widening of the band from 25 basis points to 50 basis points for the 10 year jgb, so traders are selling off jgb futures.

with that bets, we are also looking at the end that is 50% stronger against the dollar. coming up, u.k. civil service workers are set to join the picket lines. more on that story shortly. this is bloomberg. ♪

dani: there is no end at least for now to strikes in the u.k. 10,000 -- 100,000 civil workers are expected to walk out next month, leading to delays on the roadways and elsewhere. for more on this, let's get to leigh-ann gerrans. i first want to start on this latest proposed walk out what are the details? leigh-ann: we heard about this yesterday afternoon at 5:00 and we heard that 100,000 civil servants are going to be walking out on the first of february.

that was announced by the pcs union. this is an escalation of the strike action we have seen in the u.k. and the dispute is over pay and conditions. we have also heard workers from 124 government departments are going to be walking out in this strike and this will affect things like driving tests, passport applications, and also welfare payments. are going to see this happening on the first of february, and that is a significant day too because on tuesday, the trade union congress have come out and said that they have had talks and other strikes will go ahead on that day, but it will be a general strike. now we are seeing the pcs union is going to join that strike action and i wonder if it will be further down the line. dani: at the same time we have the government trying to plan for anti-strike action. what is being debated at the moment and how far along are they with that? leigh-ann: the first of february

will be this day of strikes against strikes. it has been dubbed by some of the newspapers especially yesterday, so this is a strike against the antistrike legislation the government would like to bring in, which has been highly criticized by the unions and the labour party. we have seen this come up in pmq yesterday when rishi sunak took the stand he was speaking with keir starmer. keir starmer is not backing this, but what the prime minister is saying is that this legislation is going to make sure we have a level of service in place to protect the public while the strikes are going on. we saw ambulance strikes yesterday, which does affect the national health service significantly. yesterday, the head of the union, he told lizzy burden and stephen carroll on bloomberg radio, this is what dictators do in saying that the government is bringing in this legislation

which is not fair. dani: rail strikes have been happening for some time for it i made the mistake this morning of planning my rich after work to take the elizabeth line and i saw that it is stopped today. leigh-ann: absolutely. dani: what were rail union bosses sayings of the house of commons yesterday? amid the pmq's, what was the language coming from them? leigh-ann: i have been planning so many journeys around london. we are getting the right train. what i will say is seven months we have seen these strikes going on on the rail service. that is a long time. yesterday, we saw the rmt union, we are so used to seeing him beyond the picket lines, and he is remaining clearly resolute. he said these strikes on the trains are going to continue unless the government give them a good, fair pay offer. once again, he was highly

criticized and very critical of what the government has come up with in the past, and it does not seem to be that there is any resolution as of yet when it comes to these train strikes. today, you cannot get the elizabeth line, and we have seen over the christmas period mike mcclintic did say that the government did not even contact him to try to avert these strikes from happening. once again, we are having to see that the government are going to have to make some movement when it comes to us getting home in one piece. dani: it gives more fodder to keir starmer as well as we saw yesterday. thank you for that update. leigh-ann gerrans. we wil hi, i'm katie, i've lost 110 pounds on golo in just over a year. golo is different than other programs i had been on because i was specifically looking for something that helped with insulin resistance. i had had conversations with my physician indicating that that was probably an issue that i was facing and making it more difficult for me to sustain weight loss.

golo has been more sustainable. i can fit it into family life, i can make meals that the whole family will enjoy. it just works in everyday life as a mom.

dani: good morning. this is "bloomberg daybreak:

europe." i am dani burger in london with the stories that set your agenda. stocks are oddly higher in treasuries that rise before today's expected deceleration in u.s. inflation. china shares waiver after a sharp drop in ppi. 100,000 u.k. workers announced plans to strike next month after the unions are far from signaling -- far from resolving disputes over pay. concerns mount over economic headwinds and tighter u.s. trade controls. jeffries puts it as this. when a butterfly flapped its wings in tokyo, the idea being the slightest indication from the boj moving these markets with increased expectations that they will abandon ultra easy policy. we have seen the impact in jgb futures this morning, which dropped the most since 2014, and

in the stronger yen. up 0.6% for the yen. the local reports being that the boj is examining the impact of the wider band for ycc. not much news, just a butterfly flapping its wings, but a thought is that when they have that boj meeting they will take a step closer to normalization. meanwhile, the rest of this market is doing that pre-cpi shuffle dance. you are looking at a u.s. 10 year yield that is dropping by one basis point. traders continue to price in a lower terminal rate in cuts after july. meanwhile, the dollar is hovering at a multi-month low. risk assets are doing fairly well. perhaps that's softer cpi, that is what everyone is gearing up for. basically all regions are moving higher.

china is dragging down the msci asia pacific ever so slightly. u.s. equities are little changed but they did hit a one-month high yesterday after the cash market closed. and bitcoin is a standout. it has been rallying for consecutive days, the longest winning streak since 2018. the last time we were at this number for bitcoin was when all the ftx chaos was kicking off. let's talk about the chips sector and tsmc posted a beat in the fourth quarter income despite a global downturn. they reduced their capital spending plans by 10% last year and confirmed it will not increase capex in 2023. the coming ceo says they will face growth margins pressure this year amid softness in consumer markets. joining us now is stephane houri , head of technology and research at oddo bh securities.

f -- oddo bhf securities. how much of this outlook can we apply to european chips? now that they are cutting back on capex and staying steady for 2023. stephane: as tsmc has said this morning, they will comply with the markets. all of the chipmakers in the world are in europe, so what they are saying as they confirmed that soft assets in the consumers are continuing. there is nothing surprising there, the guide for the year which is also not very surprising. and concerning the capex, it is 32 billion to 36 billion for the

year. we are in the middle of this at 44.8, so there is nothing surprising. this is not a collapse, is what we can say. dani: and it is interesting. you write in your note on the chipmaking space that multiple warnings are a source of anxiety. paradoxically in general, this helps situates the turning point. talk to me about the turning point and what happens from here after that huge bout of anxiety. stephane: exactly. the fundamental that we have at the moment is something that everybody has already experienced in previous cycles, meaning that there is weakening of demand and to market is decelerating. once those profit warnings are coming, we pass a lot of the risk assets in a better way

yearly and look at the valuation. you have a sector which was down more than 30% last year with valuation. only question people head was how bad is it really? it seems there is a consensus that at the moment the recession is going to be a mild one and the impact of the -- sector is probably going to be a mild one as well. as you said, we are all looking for the turning point. we see value that the spot end of the cycle may come at the end of q1, the beginning of q3, and generally analysts anticipate this point at the end of the corridor. the only question is how bad it is and if those warnings help us to understand where the bottom is. we still believe it will be at the beginning of q2, so that is

why this is turning into more political news on the markets are reacting positively. dani: i still go back to this question of spending because one samsung earnings came out, they had a profits drop. a lot of the analysts commentary was that they need to cut back on output, they need to cut back on capex. do chipmakers like the rest of tech at this moment need to get smarter on spending, be at on headcount or capex -- it on headcount or capex? do they need to's change strategies in this market? stephane: they need to pay attention to what they are doing, of course. it is two things. it is that chipmakers like tsmc or samsung are not really

adjusting strongly there capex because they want to maintain their investment. this is a war between the leading edge chip manufacturers. in front of the race, so they keep on spending. that is good for leading edge manufacturers like asml. they have a very strong quarter book for the year to come. the other interesting thing we see is that most of those semiconductor manufacturers continue between the freeze of spending on r&d, which we saw from tsmc this morning. they continue investment in that idea and we heard from other players. also they do not want to make a problem in the future if they do not spend enough today.

actually, they should pay attention that they keep their strategic investment at the pace which is interesting on the level of confidence they have for the overall market despite the current downturn. dani: you have given us a positive story in the name of asml. if i can get you to be a little bearish here, what's chipmaker is not prepared for this environment? what would you not be looking at? what is not a good place to be hiding out as this cycle turns? what names would you be shining? -- shunning? stephane: that is a good question, to be negative where you have the scenario where the end of the cycle is coming. i think there are still some difficulties to assess where the bottom is. in europe, we do not have a lot of memory players, none of the

micro players like in korea, so this one could be one of the first to hit the bottom. there are still uncertainties about prices and the capacity those players have. it is a space where we would still be a bit cautious even though that could be the first hit the bottom. and first manufacturers, they have launched strong spending plans and at some point the risk is that all of this capacity comes online in a moment when the market is just starting to recovery -- to recover. you might fall slightly under capacity at some point. dani: thank you so much and thank you for bringing out a little bit of your bearish side. stephane houri, head of equity

research and technology at oddo bhf securities. let's get to our other top stories this morning with the first word news. simone foxman is in doha. simone: advisors to ftx found more than $5 billion in cash to digital assets that the failed crypto group may be able to sell to help repay creditors. the company lawyer told the judge overseeing the bankruptcy that it is working to monetize assets, including many that blocked liquidity. more than 9 million customer accounts have been identified so far. the u.k. and japan have signed a major defense pact to allow military forces to be deployed to one another's territory. prime minister rishi sunak and his japanese counterpart, fumio kishida, reached an agreement in london which would allow for more complex joint military exercises. this comes as tokyo expands

bilateral cooperation amid concerns about china's rise. in china, factory gate prices fell more since december as the end of covid zero stalled factory operations. initial ppi fell 0.7% from a year earlier. economists expected -- surveyed by bloomberg expected a 1.8% drop. consumer sentiment rose in line with expectations. u.s. authorities are working to determine what went wrong in an outage that prompted a nationwide flight stoppage yesterday paid the federal aviation administration confirmed earlier that it likely blamed it on a damaged database file, saying there is no evidence of a cyberattack. at one point, an estimated 9000 flights were delayed across the united states. global news, 24 hours a day, on air and at bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries.

this is bloomberg. dani. dani: thanks so much. simone foxman in doha. coming up, we take a look at the impact of china's reopening on copper and other commodities lme copper above $9,000. this is bloomberg. ♪

>> our target for the year is 9500, which is a long ways from here, but longer-term, we are in line. we see $15,000 a ton. dani: jeff curry predicting copper will reach $11,500 a ton by the end of 2023. it is at $9,000 now and it has

been at a tear over the past couple of sessions, empowered past that number of $10,000 on the lme yesterday. slightly weaker this morning and it all follows a sharp rise to its highest level in seven months. also seeing an uptick on hopes for demand surge in china. joining us now to discuss this is our industrial commodities reporter, martin ritchie, in shanghai. so much positivity around oil and metals. do we just chalk this up to all of china? martin: that is a very big part of it. as he said, a lot of excitement in copper over the past few days with prices bursting through $9,000 a ton. china is driving a lot of this because you have this faster than expected reopening of the economy after the covid curbs. you have expectations across the board for a pivot in the

economy, the kind of thing that copper likes with manufacturing in the bottle. you have that property recovering at once, and oil prices tick higher. there is that bullish forecast from goldman at the end of the year of $11,500, and there have been a lot of occasions in the past which there have been various forecasts that have not materialized. someone say this is also not a china story -- some would say this is also not a china story. if there is a global recession this year, it could dent copper. dani: i was going to say, martin, isn't there something strange here? some sense of irony when you have the world bank president warning of a recession but you see copper not trading at that at all. is there a disconnect between

copper's prices and expectations of a global recession? martin: one of the assumptions to make in this market is look at the supply side as well, and what the bulls that goldman would say is that global inventory of copper is low. that means any incremental demand will be hard to match with supply. if china is recovering 2%, 4% copper demand growth, there is not a lot of copper around to feed that and it demands higher prices. at the end of the day, copper is tightened to macro sect meant -- macro sentiment around the world, and if you see a global slow down as he mentioned, that will -- as you mentioned, that will present a headwind for sentiment for copper for sure. dani: martin, thank you.

such an interesting market. martin ritchie giving us the latest on the metals market. coming up, we get back to the all-important data point, the u.s. cpi later today. even though it is one of the most anticipated data points on the calendar, there is concern from investors to perhaps not trust the release. their concern about people trading before the release. we will tell you about why. this is bloomberg. ♪

dani: traders from new york to london are glued to their screens today. we are all waiting for the latest consumer price index reading. many traders will also be watching before the numbers hit because of what happened last month. let's get into it with bloomberg

mliv's garfield reynolds. the whole idea being that volume was much higher before the cpi release. can you take us back in time? why was that suspect? garfield: there was always a little bit of a burst in trading activity just before this release, such an important release. traders are trying to get ahead, but last month was extraordinary. a massive surge in volume just before in treasury features in particular, but the equity futures caught on as well, and that brought a lot of suspicion that somebody somewhere new something, especially that release did come in softer than expected, so that scenario that the federal reserve would swap rate hikes. that raised suspicions and there was an investigation with the bureau of labor statistics which prepares the report.

they did not see anything suspicious, but they have not managed to assuage traders and investors, so everybody will be more on edge for what happens before the report. dani: what would they have to do to alleviate some of those concerns? garfield: we want a nice, smooth release today with not too much that goes on beforehand, and in particular, let's say if the market took off in one direction, it rose, and cpi came in hotter than expected, so it fell. it was not a leak, just people trying to get themselves in position, do a little bit of wargaming for what might happen. something along those lines will help a lot, or simply a much calm her pre-release date -- calmer prerelease date markets. dani: there is no evidence that there is a leak and it is harder

to prove the absence of something than the existence of something. bloomberg's garfield reynolds. once the time before the release is overcome of the thing itself is going to be the big market mover today. bloomberg's valerie tytel joins us for more on what will happen today. let's forget about before the numbers hit the tape. once it does hits the tape, walk us through the scenarios. valerie: i am going to be laser focused on the month on month core inflation numbers. there are houses out there looking for 0.2%, so the downside is a compelling case for a softer cpi print, which would ignite a rally in stocks and bonds if we get a softer dollar. the theme that we have seen since the payroll print last friday which shows a week wage inflation and a provision to last month's wage inflation. 0.1%, maybe 0.2 percent. this is what i think it is going

to be the key driver for the market reaction afterwards. dani: what are the potential surprises for this that this does not go as expected? valerie: if we break the core inflation number down into two components, we have core inflation numbers like housing which power has spoken about recently. this is the component which can be driven by a higher labor market. wages are key to delivering these core services and we have seen core services tick down without unemployment rising meaningfully, leaving a lot of people to believe in this immaculate disinflation narrative that we could see inflation go back to target meaningfully without an uptick in unemployment, without a hit to the economy. this is the soft landing narrative that the market is priced in since that week wage inflation number came in on

friday. the other thing is the housing equivalent. we know that these numbers are going to be dropping off because the way that the cpi data is reported, they lag, but the question is how fast this will be dropping out of the index. it is unknown based on the huge uptick in rent we saw after covid and how quickly it is going to fall, but those could be key for revisions lower in 2023 year end forecast, especially for the fed when they released their new forecast in march. dani: i think some producer out there is playing tricks on us because i told you i was not going to ask about the volume, but there is the core services x housing. only a minute here, so we have got to be quick, but how does this all feed in? could today's number in itself materially change things? valerie: it really could if we see this change in the core services ex-housing, that could

reignite where we see the terminal rate, but the market is currently battling with the fed. we are not pricing in a terminal rate above five even though many fed speakers are coming out and saying it. we are very much in between and we have six fed speakers on the ticket before the weekend. three of those will be voters, so there will be huge focus on what these guys say. and we get retail sales next week that could make it different for the fed. dani: if you listen to gundlach, he says to not to listen. grab your coffee and settle into the desk. valerie tytel is there. that is at four daybreak. up next is bloomberg "markets: europe". this is bloomberg. ♪

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anna: