>> we have a fed is not backing down. >> the market is pricing in. read cuts. its art -- market is pricing in rate cuts. >> may be done enough or close enough to having done enough. >> you don't know how much damage you've done. >> four 2023, -- for 2023, it is quite bleak. tom: good morning, everyone. this is "bloomberg surveillance." jonathan ferro and london, lisa abramowicz back from the alps.

i'm tom keene. an important conversation with jeremy stretch. welcome back from happy valley. lisa: it was happy. tom: read the gloomiest? lisa: no, was the divergence between economy and markets. people were optimistic on the economy and markets not so clear. tom: lots and lots to talk about. let's link it into maybe the key statistic and may be a surprise for viewers and listeners, and that is simply q4 gdp first look , 2.7%. i guess that is a recession. lisa: this is compelling. tom: do people know this? lisa:, to end up with a recession? how much do we get a better --

how much do we end up with a recession? this goes back to the idea of profit margins. morgan stanley, two reports coming from the economic perspective to get a soft landing and from a market perspective, we will get the drop off and see it in this quarter. tom: if jon was here, we would talk to him but he is in london. he said he is waiting for the last stage of a bear market. lisa: companies will not lay off workers as they had in the past because you know what happens, you can't hire them again and they also want to remain competitive. so earnings could go down even as the economy models through -- model -- muddles through.

tom: when you were gone, we had a 190 print on claims. lisa: it was shocking. there are reports that it is taking mother to get a new job and for companies to hire people. tom: let's look at the equity markets, negative five, dow futures. the vix, 20.27. jonathan ferro coming up with jeremy stretch. an elephant in the room, brent crude 88.20. lisa: highest going back to november. this is one of the most interesting elephants in the room. when is the inflationary impact

of china opening with the happy ending people expect? this is a quiet period for the fed. there are three auctions this week and i am most interested in the five-year. there is a two-year, $43 billion of five-year on wednesday, five year yields is where i am interested. how much do people buy the fed and the ecb can get inflation under control? how much will they pull their foot off the brake than people expected? we get earnings on southwest, american express, visa, mastercard. microsoft tomorrow, tesla wednesday. tom: coming up later in the program, daniel ives. i want to focus on apple as the

one company left standing in the layoff derby. what do you want to talk about? lisa: whether they can still be the leadership. also want to just say, friday it would get personal income and 10:00 we get the university of michigan sentiment. how much is core inflation coming in? tom: we get core pce this week? lisa: yes. tom: i didn't know that. we will talk much more about lessons learned from the world economic forum. marty patel is at all spring investments. the fears looseness to move from fixed income to equity. what is your idea on fixed income versus equity? >> we have been geared up on the equity side.

rates were so low that we felt there was a potential to lose on the equity side. this year with see rates have come down so we think bounce are an ok bargain but nothing exceptional, when we see better opportunities on stocks. tom: how does the angst and particularly tech angst play into your core dividend growth or use of cash? margaret: i do think we will see more of and in fed -- more on stocks that do well there'd we have high stocks -- do well. we have high stocks, and especially if we see lou earnings is the general consensus. lisa: will tech still lead in whatever rally we see in equities you are expecting?

margaret: i think tech will lead at certain sectors. semiconductor will lead although we have to make -- although we may have to wait until midyear to see about increasing demand and because the prices of those stocks are reasonable. we still think the high tech stocks may get underperformance this year. lisa: are you rallying around the job cuts? is this just a story that perhaps has been given up too quickly? is there a distinction between the has an have-nots you are highlighting on what you are buying or not? margaret: as far as job cuts, the market regards that as good for earnings but telegraphs with the companies think the business outlook is. you don't layoff 10,000 people because you will see a spring back at the end of the quarter. companies looking to be more cautious. lisa: when you see you don't

like bonds and do like equities, what is it about bonds that you don't like? is it that people aren't pricing in rate hikes or you don't think they will have return profile are that equities offer more in an early cycle feel? margaret: i think you have to be in early for equities because if you look at investment grade and looking at two point 25 or 3.25, that is not where you can make money. that is modestly attractive but if those do well, equities have to do even better. tom: over the weekend, i saw a massive effort to find some analog back to the boston tea party over where we are right now. what is the analog you use to

say dare i guess 24 is like what? margaret: is not like anything, because we have never had a period of multiyear near zero rates and a deficit so extremely high at the time the economy did ok. i think people are banking too much on the fed being more modest at a 25 basis point increase and that will somehow cause no recession to occur. i think people are being too optimistic about that and maybe not cautious enough about what the damage is being done to the real economy we are seeing in the early statistics lisa was talking about. tom: -- lisa: what is the t parity for that? -- the tea party for that? tom: last time the boston red sox won the series. i think it is unknown how much

investment grade quality corporate's are down, down. is it the mother of all times to buy quality investment grade corporates? margaret: i think they are really rather modest. the investment grade and high yield have done equal to the equity averages, dow and standard and poor. the returns are rather modest there is uncertainty of whether we will see rates taper down or will we see rates go up if we have higher defaults? i don't see h amend this opportunity in bonds at this point -- i don't see a tremendous opportunity in bonds at this point. tom: she was a young kid and there was a triangle of fixed income, daniel fuss, felix smith and a young margaret patel that made the best fix income block in the world. she is now with all spring

giving us wisdom there. lisa: what i think is fascinating is she is 75% in equities, even though she had training in the bond space. she said if bonds are going to do well, stocks will do even better. tom: what i see is against consensus. even when you were gone, the basic idea here is everybody is on board. lisa: i would agree, if you still have inflation and central banks committed to doing something potentially that could be a lot. investment-grade and high-yield gained 3.5%, the same as the s&p? tom: did they get it back? lisa: not much. people are still going in because they want the coupon and they see on a relative basis to the past 10 years you are still getting yield. tom: on monday, get ready for the fed meeting. our team is working on it.

we do that with the very busy week of economic data and that conversation. dan ives scheduled to be here with us. the vix 20.20. yields cannot get out of their way, 3.50% on the 10 year. stay with us. from new york, this is "bloomberg surveillance." ♪ >> keeping you up-to-date with news around the world, i'm lisa mateo. in california, authorities trying to figure out the motor for a mass shooting an asian community in los angeles. 10 people were killed when an man opened fire on lunar new year celebrations pet --

celebrations. a man was found dead from a 7'2" gunshot wound. germany's foreign minister said if berlin were asked about tanks it would not stand in the way. failure to work out a deal on tanks has overshadowed to showing more aid to ukraine. china says more than 12,600 people died of covid in the week before the lunar new year holiday. it is likely the real death toll is much higher given the scale of the outbreak. the top chinese health official suggested 1.1 billion people have been affected since virus controls were dismantled late last year. the justice department has found more documents containing classified information at president biden's home in delaware. fbi agent searched the home for 12 hours and said to have found classified notes from the president's time in the senate and vice presidency.

citadel made a record $16 billion in profit from clients last year, the largest annual return for a hedge fund manager and surpassed they amount john polson generated in 2007 against his bet on subprime mortgages. investment showed the top 20 hedge funds turned out $22.4 billion in profit after fees but losses grew outside industry giants. global news 24 hours a day, online and at quicktake on bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. i'm lisa mateo. this is bloomberg. ♪ ♪ welcome to a new era of flight.

>> from one side thinking the other is responsible for the debt. at the doing point trillion dollars -- $31.420, that is not accurate and -- at 31.4 trillion dollars debt, that is not accurate. >> if you are going to use the debt ceiling for anything but theatrics, we will pass the debt ceiling. you are correct. it has to pass. tom: mr. manchin on meet the press. thank you for the sunday talk shows for their effort.

part of it is, getting together or not. senator manchin deep in that. let's go to something i think over the weekend was there, which is the trade idea that if we are not going to trade with china, who are we going to trade with? capital economics talking about is the next china mexico, vietnam and poland as well? leaning in on the davos trend on what is the next globalization looking like. what did it look like? lisa: china, full stop. you have auto manufacturers. not just with respect to manufacturing but with selling and the political environment where if you don't manufacture you can't sell there. it is hard to see how it diverges the west to the east

and the way people are talking political when the business environment is quite different. tom: we know there are early davos folks and middle and late davos folks. china, what a splash at early davos. did that carry forward through wednesday, thursday, friday? lisa: it was the census of all the conversations are they met with manufacturers and chipmakers to understand backdrop. there was a presence there and a willingness to do business, it's raises the question of how does this bifurcation come about? tom: i am guessing taiwan wasn't invited. annmarie hordern joins us. have been talking on surveillance that the typical, usual changing of the guard as the chief of staff to president. what does the chief of staff do? annmarie: this is the top

managerial role in the white house. this is the individual that is the gatekeeper to the president, in charge of the schedule and who gets access to the president. part of that will be outreach with congress. this is an important, critical role that has a lot of the ebb and flow of how it works. tom: was it successful? annmarie: many would say klain was successful and what he got to carters and worked to get infrastructure done and they got the build back better in a mini form in the inflation reduction act. he was also to make sure the president was on board and helping to get the president to get the rest of europe and western allies on board when it came to russia's invasion of ukraine. many would view him as being a

successful chief of staff, even if they don't agree with his politics. lisa: internationally, i wonder if this is where the new chief of staff plays in. how are people concerned this place in? annmarie: i am not sure people are concerned by anything with him in terms of international experience. he served on corporate boards like facebook and has deep managerial and was the founder of an investment firm. when you talk to says this is someone who is known as mr. fix-it and is able to get things done. that is why a number of individuals are excited about his appointment thinking he could be a good person to be the gatekeeper to the president. they are about to get ready to fight with the republicans about the debt ceiling. under the obama administration,

he was the head of the national economic council and they think this is someone well prepared for that domestic fight. lisa:, she does this indicate that the biden administration is pulling back against going against the big tech names? annmarie: i don't think people are thinking that they will have a different view on tech. zients left the board because he didn't agree with where it was going and they think he has a special inside view. when it comes to this individual, what republicans will most likely say about him as chief of staff was, many would say he was able to get a lot of shots out the door. you had dr. fauci talking about the fact that he was discrete management mind in order to take the biden administration of policy us covid policy of making sure everyone had access and

fair accessibility to shots, there was the pushback from republicans and democrats as well as european leaders when they didn't open the borders into the u.s., and that was the summer of 2021 and it took them to the fall to get to allowing more travelers. tom: the bottom line is he has more in common with mitt romney than nobody else in washington. senator warren will ask, is this guy a democrat of moderate or progressive ilk, and answer is she is going to say that he ought to pay a wealth tax. is this the guy the democrats wants as the gatekeeper to their democratic party president? annmarie: this is exactly what the discussion in washington is. it is so centrist democrats are excited to be seeing someone

like him take over this role and think he can do a very good job and you have those in the worn camp that he is just not progressive enough. he has too many ties to the business community. what you have seen this administration do is two years they leaned into the progressive side of the party and you started to see them walk a little bit of that back. also as the president is preparing for a potential 2024 run. tom: what is the moment, the party that matters to everyone -- two annmarie hordern? annmarie: it has to be tomorrow come the president with congressional leaders, meaning mccarthy and we will see what comes out of that meeting. you had the republicans on the sunday shows saying that is the only way forward is talking about the debt ceiling. tom: thank you so much.

it is the american way. it is an exhausting process. cap score is exhausted treasury secretary's and you see them -- what i kept score of is exhausted treasury secretaries. lisa: the president basically come in an age 40 years during their tenure. remember that in the day when we were laughing and making fun of people that things were going to happen? the important thing here is, the longer-term credibility. everyone expecting there would be resolution but the longer they go to the deadline, the more that will be a flare up and freak out and does it have longer-term consequences or is it a wash? tom: to your point, i would

suggest 2011 has scarred all, including those who think this is a non-event, which we heard some of this weekend as well. i will set this up and we will do this in the next half hour as well. jonathan ferro is on assignment in london. that has correlated with a small soccer game. as you fly into heathrow of the fog of the weekend and you look down on the river thames is a soccer field out of the movies. it is called full ham. we will talk to jonathan about that with jeremy stretch. ♪

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tom: good morning on on monday. lisa abramowicz back from davos. jonathan ferro in london. thank you for joining, and interesting week. i want to take 30 seconds ora or maybe a little longer, for people who ignore crypto, they ignore it at their peril. we had conversations on this last week and there is something percolating low, even as bitcoin comes up. lisa: you mean in terms of the genesis and bankruptcies and issues where it is a washout.

behind the scenes, people who are into stablecoins or other instruments more established and what regulation are hoping for the failures of these other companies because they want to get the washout done so they can move on. tom: cut is the optimistic view. lisa: cat is using crypto as less of a spec it of tool and more of an instrument to the western unions and the banks from entering. tom: i put this out on twitter and i have the clearest memory of sitting with jon watching world cup and i am looking at one of these crypto people, seeing a percent or 9% or 10% on the web -- 8% or 9% or 10% on the web. market patel would know this. new -- margaret patel would know this. we talked about earlier. lisa: people put their life

savings in some of these thinking they were high-yielding accounts. this one guy put his mother's savings and she keeps asking her -- him how it is doing and he can't tell her. . who is telling them that you cannot promise 8% or 9%? tom: crypto for bloomberg on the terminal is the currency key. ari under the illusion that it is a currency? -- are we under the illusion that it is a currency? lisa: there is a question of how do you foster innovation? in a period of restraint with higher rates and at a time when people are bad actors could go into a world that was really pumped up by low rates and do what they want. tom: dollar stronger today.

dxy with just barely. it has been quiet over the weekend. i look at jonathan ferro living large with the roundup on sterling. he is looking at 4000 square feet over that cutie pie place. currency dynamics lead in london by the recovery from 1.03 to 1.24. jonathan: i am funded in american dollars. let's clear that up. euro-dollar right now one point

0803. -- 1.0803. i am going to catch up with jeremy stretch. the euro zone avoid recession. can the eurozone avoid recession? jeremy: has changed because the retreat we have seen in european gas prices and more constructive background for the german exports. it suggests europe might just avoid that negative gdp print. let is one of the catalysts that has been driving the recovery narrative alongside the presumption that the ecb is much more hawkish. jonathan: stagnation versus recession. now we have to talk about stagnation versus recovery. jeremy: what we had is going

through the third quarter last year, an enormous amount baked in because we were talking about potential for gas rationing. here we are in the winter period , but the winter has been relatively mild thus far. if you look at gas storage levels, they are running above levels you would expect normally at this time of winter. that eases the burden of refilling of the gas storage tanks through the course of the summer. we have seen german opening the liquefied natural gas ports. the ability for germany to get the lng flows from the u.s. in particular has helped to alleviate recession risks. that is one of the legacy issues . jonathan: you mentioned the ecb.

in 2023, does the ecb hike more than the fed? jeremy: i think it does. you have to paraphrase margaret thatcher into it with the interest rate story. it seems likely to go along with the comments of the weekend that will's -- we will see moves from the ecb the next two meetings. let does suggest the ecb will be more hawkish than the fed, because if the market is right and obviously arc it's tend to be aggressive in terms of calling for moderation for policy tightening from the fed, that suggest the ecb will be more hawkish. jonathan: so you want to play that against the yen and euro?

jeremy: the yen is an instrument. we have seen policy uncertainty after the adjustment in the yield curve control in december. the minutes from the meeting released overnight suggest the boj members were worried about communication aspects of the change. it was always going to be the case to expect housing normalization from the boj. after he leaves office, i think there is still scope for yen appreciation. we would be looking for it in the near term to provide better levels to looking for a return back to 120. jonathan: we have had several decades of rates in japan what is normal for japan? jeremy: japan and japanese monetary policy has been the same, aiming for the 2%

inflation target, sporadic in some circumstances like we see now. the dynamic we will see, if we start to see japan moving away from negative rates, that has enormous invocations for rates. they are looking for high yields and if there isn't dislocation in the fund flows from japan, that has enormous implications. we will look for spreads to compress and that provides for the dollar-yen to move up. jonathan: could tow shoe how far the boj can pull back from yield curve control. if you told me they would deliver it with a have delivered on throwing in qt, i would've had real doubts about what could or could happen to the bond market. i would've expected the periphery to have difficulty.

have you been surprised by that? jeremy: you are right. if you think about what we have seen from the ecb, starting to create some degree of fragmentation risk. we have seen a degree of relative calm in terms of the movements has seen in monetary policy and that will be interesting in terms of japan. can the tolerate yields moving up? i think they can if we get a more normalized yield curve in japan. there is the scope for adjustment. i am not suggesting the boj will suddenly adopt an aggressive pace of balance sheet constriction. it is more about easing considerations for yield curve control and encouraging fund flows to remain on shore. that is the dynamic rather than going for a complete change,

even within the confines of a new administration. jonathan: waller endorsed the 25 basis points move are we done after that? jeremy: we are getting into a situation where we are at the endgame. we are seeing on employment and earnings. those are the obvious benchmarks. then looking within the cpi print to see how the dynamics play out. i think the other issue we would take issue with from a market perspective is the degree of the rate cut pricing into the market. we don't necessarily think we should be pricing and cuts in the second half. jonathan: markets have to grapple with changing probabilities and price accordingly. who has more chance, the federal reserve getting into five or --

getting into the top of the league? jeremy: i cannot answer anything in the affirmative. jonathan: good to see you. that does it for me until i catch up later. tom: an important conversation. what is really important is this is a good assignment for jonathan ferro. what is important here and this is something we don't have in american sports, this is basically my amateur take, the fenway park of english football. you are going large, leaving real and you are going to be in h six. what is it being in the hammy s tand h6? jonathan: it is difficult for

the away team to come in and win. if you look at the changing rooms, not fantastic. when you look at manchester with the multimillion dollar stadiums. things are a little more old-fashioned and dare i say cheap. tom: jonathan ferro with important bond conversation. features negative six. dan ives soon. ♪ lisa: from news around the world with the first word, i'm lisa mateo. in california, california -- the suspect in the shooting has killed himself. the attack took place during

lunar new year celebrations. it is believed the suspect, described as an asian male, try to carry out a second attack. in the u.k., ambulance workers walking out in the biggest strike by first responders. trade unions are protesting pay levels and demanding a double-digit pay hike. germany and france warned that european instances will have to ramp up spending to compete with the u.s. and china. the german chancellor and the french president met in paris on sunday and discussed how the eu should respond to president biden's inflation reduction act, 500 billion dollars in spending and tax breaks to benefit u.s. companies. bloomberg has learned that president biden zients will name jeff zients -- president biden will name jeff zients . the chief of staff is among the most powerful figures in washington.

hedge fund elliott management has taken a multibillion-dollar stake in salesforce. it looks forward to working constructively with the business software company. salesforce sales have plunged since the peak in 2021. global news 24 hours a day, online and at quicktake on bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. i'm lisa mateo. this is bloomberg. ♪

>> tech is really weak paired everything else. that is just not something we are used to. this earnings season, if you take tech out, you have a 5% growth this quarter.

who would think tech is the thing holding everything back? i think this continues longer. tom: thank you for the notes on last week's efforts. a really interesting week. going into the fed meeting on february 1. bonds not giving much, 3.50 on the 10 year yield. brent crude, 88.21. this and i are in new york and jonathan ferro is in london. joining us is daniel ives at wedbush. two things, apple was the zeitgeist this weekend. the other is news on fortress benioff.

tim cook, a victory conference call for apple. what will you listen for? dan: they were tacticians in terms of how they built the business and is holding up better than expected we are not seeing any major cuts. that will be a big narrative on the earnings call. tom: explained to the audience the mcdonald'sness. they farm out manufacturing like mcdonald's firms out there in hamburgers. the franchise thing, apple is almost doing a manufacturing franchise thing. how unique is that? dan: is one of their strengths. it is how they built of the supply chain in china. we talk about more and more control of the ecosystem. chips, they have been intel at

their own game. what is happening at apple, that gives them an advantage over others. others are laying off and apple continues to add. tom: salesforce, 79,000 people. benioff is a force unto his own. 51% from peak, apple market on 24%. what is the damage at salesforce? dan: for benioff, struck -- clock struck midnight. they will continue to drive significant margin improvement profits good there could be potential spinoffs and strategic changes. salesforce, in a strong performance in a cloud, our view is these are festival situations in terms of what i believe in tech we will see more and more

activists, especially in this market. lisa: salesforce up 3.4% after the announcement that elliott made the investment in salesforce. what other companies are good targets for this festival you describe for activist investors? dan: you will see it across the board in its software and chips. i think that is where you will see activists spend their time. this is the time where you are seeing tech firms cutting across the board, despite what we see with apple. that is creating m&a, growth opportunities, potentially drying more buyback dividends. i believe this is underinvested the most we have seen since 2000 nine the earnings setup is bullish. -- 2009 the earnings setup is bullish. lisa: what are you looking at to

say they are underinvested? dan: this feels like 2009, 2002, relative to sentiment, how many are investing going into earnings. i believe urich city cap drives our bearish on tech -- i believe new york city cab drivers are bearish on tech. tom: i get the whole purchase thing as well. it is almost like they don't want to be a successful doll chick -- dow blue chip stock. do they shock with appropriate dividends? dan: that has always been the conundrum. they don't to be known as right lane going 45 miles per hour. tom: a 1% yield is right lane going 45 miles per hour? dan: for them they will try to

find the balance in terms of dividends and buyback. this is a company that continues to generate massive cash flow. does that balance, but they are going to continue to innovate and grow in the key growth areas. lisa: intel earnings on thursday, how much are we going to see apple hurt chip makers bite making their own and circumventing them entirely? dan: it is cook and cupertino. you are talking about one of the bigger buyer of chips and now they will own more and more of that landscape. they want more control of their ecosystem and you will see that more and more, not just on the ship side but in other areas that is a theme we will see with apple. this period of time, they are going to get stronger, apple. lisa: you have been vocal about the haves and have-nots in tech.

and you are talking about the underinvestment in apples and salesforces in this world. what about the others who have a challenge in a different way? dan: you will continue to see zuckerberg pivot further and further from the metaverse. that is obviously a long-term strategy. lisa: will it be renamed facebook? [laughter] dan: see why that stock is like that on the cuts. the metaverse strategy which seemed good 12 to 18 months ago, or people are realizing that was not the right move. tom: what does valentine's day look for mr. musk? there are so many moving parts. dan ives on how elon musk, is it a lead.

this year, how does he get to favorite 28th -- february 28? dan: further distancing himself from twitter. even though, they have two rip the band-aid off this week in terms that she have to rip the band-aid off this week -- you have to rip the band-aid off. it shows the demand story is going to be strong. lisa: when our layoffs not going to be a great thing? dan: we see another 5% to 10%. if we get to the middle of the year and there are more cuts, that is where it gets dark. tom: jonathan ferro emails what is his target on apple? dan: i believe this is one where

there is theater but apple will be a rock of gibraltar in this earnings season. tom: give a bulk case to 200? tom: what are some of the parts? dan: you could rationalize the services business conservatively at $1.520. you look at the hardware business and where we will go. tom: what is the share price on that? dan: share price right now, $70 to $80 right now per share is the services business. tom: so you are getting everything else on the 200? dan: i believe you could get business underestimated in this multiple compression architect.

lisa: i want to say, you are the one who compared apple to mcdonald's. if you go to an apple store, there are people lined up, can't get people to check out quickly enough to buy $1000 or $2000 of merchandise. tom: the way they take the distribution risk off the income statement is brilliant. the schools back -- this goes way back. dan eyes, thank you -- dan ives, thank you. features negative seven. jonathan ferro in london with an important conversation on fixed income in london. this is bloomberg. ♪ this is ge vernova, helping generate

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>> we have a fed here that is not backing down. >> the market is pricing and rate cuts and already sees the data rolling over. >> what they are feeling now is comfortable that they may be had done enough or close to having done enough. >> you don't know how much damage you have done. >> earnings are supposed to go down. >> this is bloomberg surveillance with tom keene, jonathan ferro and lisa abramowicz. tom: good morning everyone.

jonathan ferro in london. i am tom keene with lisa in new york. an eventful five day work week, everybody on board. it is real simple as we churn here with the economic data. a first look at q4, it is all about driving to february 1. lisa: how much do we get from the fed, this feeling of stepping down they are talking about, but this is the issue to me, does it matter? are they building insurance by going slower but we'll get to the same place and hold it there for just as long? that is the distinction that is being debated in markets. tom: we were talking -- was on fire with citigroup. he said we've gone 50 to 25 but did not give up on the migration to some form of five-ish terminal rate. lisa: and he is not alone, a lot of people saying the same thing

from the analytical community at the market is still pricing in rate cuts and at this point, how much are we ignoring the inflationary impact of china reopening, of europe reignited by a warmer winter and people able to go out and spend with different aspects of the inflationary picture? these are the issues people are worried about ahead of the norwegian sovereign wealth fund. tom: that is gloom around hydrocarbons. thank you will kennedy from london. i think they were parting last night. -- partying last night. brent crude about ready to round up to $89 a barrel and that float -- that folds into that inflation left. lisa: everyone said there would be more demand coming from china

as they come back online. the lunar new year is being celebrated but as we start to reopen, you might get a real sense of that. at what point has this been a story about energy and energy prices that went down and all of a sudden, disinflation is the story and prices start going back up. tom: we will get some form of lift, above $100 a barrel. we have a nice synthesis coming here with em and global economy but we really have to go through the data now. futures giving nothing, yields lower, low yield, turned around abruptly, i think it was thursday. a little bit of lesson version but i want to point out 10 year real yield, my benchmark is

still -- and just to close it out, the bloomberg financial conditions index is back up to an accommodative positive .20. that number doesn't mean a thing except that jerome powell says it is a job not done, a major thing. lisa: the issue i have is people have stopped talking about this. looking at real data and they are going to be patient. here is what we are looking at this week. a pretty quiet week ahead of the fed meeting next week. treasury options, we have the 2-year note, the five-year notes on wednesday and the seven-year notes on thursday. watch the five-year. a lot of people were investing, how much do you see people move back from this belief that the fed will do enough to stymie inflation in the long term?

this week, a slew of earnings, microsoft on tuesday, tesla on wednesday. i'm interested to hear what is going on with the chipmakers, especially in light of apple cannibalizing the business away from the intel's of the world. very curious for microsoft. how much companies are going back to the tech investments. friday we get a slew of data after getting the gdp print and a host of other data, durable goods. personal income and spending and core pce. the key metric that the fed looks at has been rolling over just a touch. does not turn the other way and does not flatline. how much does this give us, to get a sense of inflation? tom: this is spotify, music

streaming and they've got some real competition from apple music. spotify to cut about 6% of their workforce. 18 leave for the morning. lisa: the layoffs continue and the shares rally. shares are up more than 3% ahead of the market. tech companies announcing layoffs and shares are up. tom: we really decided to look at asset allocation and we continue that theme this morning with other stuff coming up. jonathan ferro in london on fixed income strategy in a bit but for in right now, alifia doriwala joins us with rock creek group. real hydrocarbon focus and also within em -- we are thrilled she could join us this morning. alifia, what is cash right now? is it an asset? alifia: last year, crash was -- cash was definitely an asset.

we are putting money to work, with fixed income more than anything else. a little too early to be chasing fixed income but we think at some point we are going to start extending durations. fixed income is a big focus today. tom: what do you do with energy as the only survivor of an ugly 2022? you have terrific natural gas history. how do you frame that or how do you bet on that out three years? alifia: lisa mentioned two of our main themes. the energy shock from the war in europe, we saw winter warmth, european subsidies, the u.s. tapping into the strategic petroleum reserve, we see china on the other hand, demand for oil is going to increase as china reopens. we are looking at these factors and saying is the second half of the year going to be like some of the tensions we have seen in

the last year? lisa: the potential for the energy crisis to rear its head, what are you waiting for? yields are already a percentage point off of the recent highs. what are you waiting for to say it is time? alifia: it is a continuous conversation but we have seen a disconnect between market expectations and the hawkish bounces. markets think the fed is going to have to pin and reduce rates. we think the 10-year could retrace to run for percent earlier this year and that is going to signal a good opportunity to slowly start buying duration. we're looking for good entry rates but we don't want to chase anything because we do think we are still a long way off from the fed signaling any sort of even cost. lisa: what is interesting is the idea of a 4% 10 year yield and the implication for equities that previously sold off when

yields went up but if we have an environment where it is a positive look at the economy and what could potentially happen with growth, it is it -- is it going to be asked -- is it going to be positive or equities in the short run? alifia: we think kind of middling for the next six months but i think you will have to pick your spots. you have to remember the s&p is still trading around 18 times where -- so it could be a valuation story in the first half of the year. tom: alifia, let's talk about the vogue, ethic it was 12 months ago, 24 months ago, you get the theme. em and international are back. is this time different? alifia: it feels like a little bit of a consensus trade because you are hearing people talk about it more and you can't generalize it. china to brazil to india, these are completely different factors

and time horizons but as an institutional investor, you have to be in emerging markets and you have to get china right because that is the biggest determinant in an em portfolio. tom: thank you so much, alifia doriwala, with rock creek group on the mystery of allocation. market outlook sought to be done march 31. doug kass with a really important insight. thank you for listening and watching. he is with sea breeze with real money at risk and we talk about share buybacks, there are two kind of buybacks. you buybacks shares and your share count goes down. and then there is buying back shares and you look brilliant but it is a complete shell game because you are issuing shares out for compensation and it is a wash.

i think that is a really important technical point that is often missed. lisa: there is a bigger point behind that which is people often look to the share buybacks as a tailwind to a lot of companies and performance and there isn't as much share buybacks that are planned this year. what kind of pressure is that for equity performance at a time when shares are lower, that is something people are analyzing. tom: a great study done a million years ago. basically they did a study of companies buying back their shares at the top of the market. they say we don't want to do that. at the bottom of the market. they should be in the triple leveraged share buyback program. lisa: it is really successful. tom: you were not there for that.

some of these bonds i mentioned, i don't like to mention bond names on air but the old days i would get out the blue book and look at the standard. given investment-grade bond is down even 20%. lisa: is going to take a while to get that back. have we reset to a normal that will be sustainable and can actually compensate for all of those losses? tom: ferro will be in in 10 minutes. look for that here. ♪ lisa: keeping you up-to-date with news from around the world, i am lisa mateo. poland asks germany for permission to send their

german-made leopard tanks to ukraine. the failure to work out an agreement on tanks has overshadowed pledges to send more military aid to ukraine. in california, authorities are trying to figure out the motive for a mass shooting in an asian community near los angeles. 10 people were killed when a gunman opened fire in a ballroom during lunar new year celebrations. the suspect, described as an asian male was found dead of a self inflicted gunshot wound. the justice department has found more documents containing classified information at president biden's home in delaware. fbi agents searched the home for more than 12 hours and are said to have found classified notes from his time in the senate and vice presidency. in the u.k., the power grid is asking some households to cut energy usage today and is likely to extend the request to tuesday. a plunge in wind power and freezing temperatures are testing power producer ability to keep the lights on. spotify is the latest tech

company to cut jobs. the streaming giant said today it is cutting its employee base by about 6%. the company has about 9800 employees. spotify stock fell 56% last year as investors questioned when they would see returns from big investments in podcasting. global news, 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i'm lisa mateo. this is bloomberg. ♪

>> the 14th amendment says nobody should question the -- we should raise the debt ceiling. if republicans are saying they won't do it and are threatening our credit worthiness because they want cuts, let them put cuts on the table. tom: one of my favorite people on the planet, tim kaine understands that if you are the university of richmond, you get to go to the ring dance which is a holdover from another time and place. he is the former mayor of richmond, he taught at university of richmond law school and worked his way along the path to a vice president candidate with secretary of state clinton and then onto his

work in the senate himself. he is part of the matrix that is out there. jon ferro and moments from london -- in moments from london. we go to annmarie hordern, to speak -- speak to senator kaine and the idea that is percolating of governors as presidents. do governors make good presidents? annmarie: i think some might agree. it depends who you ask. they have their own little fiefdoms and domains, so they've gone through the motions. at this point in congress, things are so volatile, which is why you see both parties potentially looking to governors to be the leaders in the 2024 election, especially the republican side. tom: earlier this morning,

emphasizing today, the governor of michigan, the governor of florida, but are they advantaged in terms of getting ready for the primaries because they are distant and removed from the capitol hill derby? annmarie: i definitely think so, especially when you see the fact that there is just nonstop political debates, even on things like the debt ceiling which has been the central debate on capitol hill between republicans and the white house, republicans and democrats and is this even resonate with the american people that are worried about everyday things, like higher grocery costs or rent? we spoke to governor sununu of new hampshire last week and he was pretty direct when he said 'god no, i'm so happy i'm not in congress.' he thinks he can get a lot more done outside of congress and it does set individuals him --

individuals like him up in terms of a run with better pr. tom: boiler up would be mr. daniels of indiana. lisa: the subtext of a lot of what you are asking annmarie about is if president joe biden will run again. how much pressure -- that is basically what we are talking about. tom: ferro went to london and you are replacing him for giving me grief? lisa: how much is ramping up against president biden saying stop already, you are not popular, especially with the classified documents. let's start setting people up to run instead of you. annmarie: the classified documents and the drip drip of them over the weekend. a fourth batch discovered. all of this is going to make it a lot more politically embarrassing and harder to

become president as he wants to potentially talk about a 2024 campaign and run. on the other hand, this president did get a lot done in his first two years as president. at the same time, there was supposed to be this massive red wave referendum on president biden in november and there was not. he is in a position now where many in the party feel like if he wants it, he has proved himself but again, there are those whispers about it being time for a younger generation to take the lead. >> biden should be embarrassed -- lisa: "biden should be embarrassed." the words yesterday. there does seem to be more pressure. i understand some of the winds and the arguments on the other side. if former president trump does not run, is it likely that president biden will also step down from the race? annmarie: it is an interesting

question because if you look at the latest polls, it shows that biden would still beat trump, but if governor desantis entered the race, he would be the one who could beat biden. potentially if trump was to bow out, the current president would maybe also look to the democratic bench, which at this moment looks kind of slim. the president also has to be careful about the timing of all of this. he will become a lame president the moment he says he does not want to continue to a 2024 race. tom: i look at the set up for the week and the politics folding out. help us with the calendar into the year. when does the primary season start and by that, i mean when do the centrists of both parties confront the very hard left and very hard right rings of their party? is that autumn or summer? annmarie: i think it has already

started. you heard from nikki haley on fox news talking about the fact that she hinted about her own run and wanting to get involved in the republican primary. there is no reason why anyone should come out too soon. right now we have only one individual who says he is running for 2024 and that is donald trump. a lot of people want to see who decides to get in the race and if they are going to want to go up against them. one of the key parts is once you are in it, when do you back out? the timing of making sure that you are part of potentially a future candidate and giving that individual the help and the leeway and the campaign financing that they would need, but i would say by the summer you will have a lot more names percolating around washington. lisa: which party gets hurt the most by the debt debate, the

debt ceiling limit and all the drama around that? annmarie: if you look at past polling, it is republicans who have fared the worst when it comes to the debt ceiling and this goes back decades because they continuously bring up this fight saying that they want to negotiate spending on it, when you saw during the trump administration, democrats went on with the debt ceiling, republicans had to raise it, the former president was in power and they voted for it. when you look at past polling of the american people, it is the republicans that it hurts more. tom: thank you so much, annmarie hordern. we will continue on that. -- says this is not 2011, treasury dynamics will be very different off the shock of any kind of decrease of the rating. lisa: also lessons learned from previous eras. tom: i agree with that. lisa: this sort of political

liability of being on the wrong side of this debate. even president trump was out saying please don't do this. don't be an obstacle to passing this. he was talking to fellow republicans. this is an interesting moment as we end up with something that could be dramatic but people are not pricing it in. tom: i'm still waiting to get up to summer, as we heard from one democrat, can they just show us their spending cuts, which is what they don't want to show. they don't want to play that card. lisa: it is not very popular for social security payments to be cut off and that seems to be a big concern. tom: with that happen if there is some form of shut down? lisa: i will throw out that it has to become an issue if banks don't understand where the funding is going to come from, will they process the payments? there are things like that that go on. tom: this is like a hot stove leak debt ceiling topic.

lisa: it is painful. tom: painful also, the bitcoin. i sold it all at $15,000. lisa: when did you get so interested in bitcoin? tom: matt miller grew a beard and i said that's it. i'm all in. lisa: where did this come from? tom: futures at negative three. 10 year yield, jon from london says it is cold here. quote bonds more. stay with us. this is bloomberg. ♪

i screwed up. mhm. i got us t-mobile home internet. now cell phone users have priority over us. and your marriage survived that? you can almost feel the drag when people walk by with their phones. oh i can't hear you... you're froze--

ladies, please! you put it on airplane mode when you pass our house. i was trying to work. we're workin' it too. yeah! work it girl! woo! i want to hear you say it out loud. well, i could switch us to xfinity. those smiles. that's why i do what i do. that and the paycheck.

tom: bloomberg surveillance. good morning on a monday. bramo is back and she says bonds bonds bonds. let's do a data check. sort of down towards 3.99 but didn't get there. this morning, 3.50% across the two-year and the former benchmark piece, somewhat related with a 30 year mortgage. 3.68%. we are watching brent crude seriously. ferro in london with an important bonds interview. we will do one here in a moment. lisa, how about that housing market? lisa: that has been a serious question.

honestly, speaking with people last week, they were saying there could be another 10% klein. tom: this is what drives me nuts about davos. the people talking can't decide whether to take the helicopter to their fourth or fifth home. i should listen to them about housing? lisa: i take your point. there is a feeling of how close are you to the reality of anything normal people deal with at a affair like this? when people look at the granular data, there has to be some retracement with mortgage rates where they are and that was definitely a theme we heard persistently not only from executives but academics. tom: what did you learn -- what did you learn about the schwarzman blackstone real estate experiment, as they call it? lisa: basically if you end up as an institutional investor owning large swaths of single-family

homes, what do you do? honestly i don't have intel in terms of whether they're going to keep buying or sell but what you are seeing in the data is that rent is continuing to climb because people are priced out of buying homes because of mortgages. tom: you think that is a tangible effect? lisa: i do. look back historically. rent does not go down that easily. usually it stays the same and people have to be housed. tom: we are as guilty of this as anyone. john miller owns a luxury apartment study -- of stuff nobody -- i couldn't even afford the tax, let alone the property. i wish john miller with all of his wisdom would go to like queens, 47 blocks around six crete restaurants. tom: -- lisa: there is a huge bifurcation that is ongoing and this is why it is so hard to get a handle on the data between the lower end, the middle end and the high-end which seems to be insulated and we continue to see

that. tom: do we have equity? lisa: let's start with spotify. we talked about how they were announcing layoffs of about 6% of their jobs and what i find interesting is that shares are popping, up almost 5% out of the market. to me, how long does this go on where if big tech companies or even medium-sized tech companies announce layoffs and the shares rally, it will public happen until the middle of the year and people might end up getting more concerned about more pain. tom: what do i know about this? -40%. is this a viable business, are they a zombie company that happened to be treating public is what i'm asking? lisa: i will frame this another way which is how do you identify the tech companies that have staying power, the apples of the

world, how much are we looking at a seat change in the business ? i want to take a look at salesforce because you do see elliott management coming in with reports of a multibillion dollar investment. about how it is going to be a festival for activist investors and those shares are up about 4% and how they will make the cuts necessary and make the management changes to get some action back to the shares and add some value. tesla reports earnings on wednesday and though shares are up at about 2.2%. cuts to the pricing were announced friday. tom: very interesting. lisa: but why? is it because of a lack of demand? is it because they are trying to price out their competitors and get ahead of the gm and ford of the world? tom: what they are doing, the

price units go up and revenues do better than you would think with a 20% price cut. lisa: how much does that give a feeling, did we get a sense of what the demand is like from those earnings results? tom: in the crosshairs of the retail -- truly a historic year, is the charles schwab company, from the schwab center for financial services, collin martin joins us right now, fixed income research acts. column i'm going to cut to the chase. it drives me nuts in financial media, where fixed income sophisticates talk about spread, the talk about dynamics, the talk about as if turning 22 didn't exist. i looked at one blended iconic bond portfolio. i looked at individual piece.

the 30 year microsoft piece is down 30%. let's begin with a look back. how bad is the carnage? collin: it was a really bad year in 2022 and what we tell our clients is that unfortunately we can't undo that. how would like to frame it is making sure you are matching the investments you own with what your time horizon is. somebody at microsoft, a lot of times in the financial media we hear people sensationalize things with up to a 30 year treasury and the carnage we witnessed there but the way we look at it, a lot of our clients and individual investors are not owning 30 year microsoft bonds. maybe they have a liability but we don't think a lot of our clients or -- we really focus more on the intermediate side of the equation but i think another way to frame it is matching that

time horizon. if you buy a bond, holding it to maturity, these prices are unrealized and they are paper losses, not realized losses and you know what to expect at a given time frame. the same is not true for the funds and that is a different story but we can't undo what we saw last year. it has been a strong start to 2023 but we still think the outlook is favorable now and we just need to align your investments with your timeframe and objectives. tom: so important they are, mr. martin absolutely nails where people like me go to the sensationalism of a 97 year austrian piece to get a big number to make a banner pop on television or even a banner pop on radio and with that said, what is the duration that you have, the duration of u.s. papers, 5, 6 or seven years, you

coincide that with most portfolios? collin: if you are looking at good examples, you can go to those european hundred year bonds and that will give you a better bank for your buck. the way we frame it is to not just be short right now. i know that is a concern given last year's performance but we think there is this idea and hesitancy to move further on the curve and a comic question is why would i invest in a 10 year bond at three -- at 3.5% and we've got to lock in those deals with certainty. but that magic number is, it is going to depend on each individual investor but it is probably a little bit longer than what most individual investors have right now. lisa: don't you get a little concern or feel uneasy given the rally and how much yields have come down, concerned that maybe

trade is already up? collin: it is a concern. when we published our outlook, we thought the 10 year would fall and we got awfully close in just a couple of days. our guidance is a little more difficult now and we understand it is a difficult pill to swallow, to accept a yield. it is a little more challenging, but our outlook really does remain the same because we do think growth should continue to slow and we think that we have seen in the soft data should translate to a softening in the hard data and we think inflation is going to continue to trend lower as time progresses and we will see those rate cuts and that is what it comes down to. markets are forward-looking and what was the average of that short-term rate over a period of time?

we think it could be a 2024 issue but we do think that as growth continues to slow, we will see yields across the curve, especially on the low-end fall a little bit. lisa: when do you think inflation will fall to 2%? collin: it could be later this year, probably a 2020 four thing. one thing we look at a lot is wages. yes they are coming down, but they are still at an elevated level and i think we know it is a key driver of inflation and we look at the landscape and it is still relatively strong. we are trying to figure out how we marry the issues of the headlines we see of all these job cuts and higher increase announcements with a low on a point at rate but given that hard data we have seen, we think the labor markets written -- are remaining resilient.

we are still at that 2.5 percent level. if you look at those numbers, we are still looking at twos and threes. we need to see more before we are more comfortable that we're going to get to that 2% level. tom: thank you so much, mr. martin at the schwab center. i can't say enough about it, if you've got something moderate duration, you are in carnage, down 10%, scared stiff. the iconic book on this is inside the yield book, sydney homer, i was directly involved in bringing back the second edition of it and it is a rite of passage in bonds. you have to read it in the major message which you heard from collin martin is don't panic and hold to maturity. lisa: to extrapolate that

outcome of this was one big discussion and if you don't price in the pain, it will go away because every thing will go back to the value it used to have. you've got regulators and central bankers saying this is going to be an area of pain and you have people on the market saying this is why it is not going to be priced in. tom: 50 years on from inside the yield. the majesty of sydney homer and martin leibowitz. stay with us. this is bloomberg. ♪ lisa: keeping you up-to-date with news from around the world, i'm lisa mateo. in california, authorities say the suspect in the shooting deaths of 10 people in an asian community near los angeles has killed himself. the attack took place in the ballroom during lunar new year celebrations. it is believed the suspect, described as asian male tried to

carry out a second attack nearby. in the u.k., ambulance workers are walking out today in the biggest strike by first responders. trade unions are protesting pay levels and britain's national health service, demanding a double-digit pay hike. germany and france warned that european businesses will have to ramp up spending to compete with the u.s. and china. the german chancellor, and the french president met in paris on sunday and discussed how the eu should respond to president biden's inflation reduction act. that measure includes roughly $500 billion in spending and tax breaks to benefit u.s. companies. bloomberg has learned that president biden will name his next chief of staff today. he is a former business executive who was once the chief -- was one of the chief architects of biden's covid team. the white house chief of staff is among the most powerful figures in washington. spotify is excited to be the

next tech company to announce layoffs. we have learned the music streaming giant is planning layoffs as soon as this week. spotify stocks fell 66% this year as investors questioned when they would see returns from big investments in podcasting. global news, 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i'm lisa mateo. this is bloomberg. ♪ this is ge aerospace, advancing flight for future generations. ♪ welcome to a new era of flight. ♪ girls... the chess club has gained an edge on our bake sales. we need more ways of connecting with customers, fast. i know some consultants with great ideas. can they help us improve our digital experience?

absolutely. they've invested over $2 billion in tech. that could really help us manage inventory. and save us a ton of dough. then let's take back our market share. checkmate, chess heads. girls, i said “bedtime”!

>> there is enough softer price and wage data for this fed, i think the way they are feeling now is comfortable that they have maybe done enough or getting close to having done enough. i am quite uncomfortable that they have done enough here and i think we will see that in some coming data.

tom: andrew hallman horse with citigroup. i really can't say enough about that conversation. many notes off of the intelligence of the kid from ucla. he just killed it last week. the heart of the citigroup matter along with so many other people, and the parlor game if you will is they will not retreat from where we are going. it may take longer to get there and all of that stuff you are addicted to but the bottom line is they did not retreat from five-point expert. lisa: should i just say bonds bonds bonds over and over again? tom: i think it is price down, yield up. lisa: it depends on if people will think there is a recession that will get induced by that rate and then investing in longer-term debt but these are

the questions people have shrugged off because they believe in a soft landing which i think seems more likely with certain aspects of energy and what we have seen with a warmer winter, but does that sort of upend this idea of the fed backing away which a lot of people would want to see? tom: we will talk bonds with jonathan ferro at the top of the hour. thank you for joining us. it is really important to book damian sassower hour in the year of the bunny. we are doing that right now. basically asia has shut down. year of the bunny? damien: they are all hopping around out there. i am a tiger. tom: how does it shut down the entire asian continent? damian: it is cold, it is a spring festival. people go home and spend time with their families. tom: how does covid overlay on

that? damian: it is going to be a very interesting holiday. tom: a micro decision of a china recovery into a given company? how does it impact indonesia? damian: i heard lisa talking earlier and she had some good conversations out of davos about how did -- how it is difficult to your business out of china. if you move out, you will not be able to sell into that market. there are some real decisions that have to be made but rest assured we are seeing a lot of people reengineer the supply chains in the place of southeast asia. we are not seeing -- that one would've hoped for but those currencies have absolutely killed it and now is the time as an emerging market practitioner to be looking to receive

emerging markets because we believe the fed is going to pause at some point in time, the means the markets are probably going to pause as well and you will allow -- a lot of people are starting to look at brazil and mexico, hungary, the czech republic. i think there are probably some legs. lisa: i googled year of the rabbit after you said that because that is what i did and fireworks came up and said people who are born in the year of the rabbit are believed to be vigilant, witty, quick minded and genius. as we talk about the reopening of china, there is an issue of its effective commodity prices with a lot of people from chevron -- coming out saying it will boost prices of crude. how does that upend or add to some of the emerging markets that a lot of people are piling into? damian: the fed has been a softer dollar. if we do see inflation remaining sticky for longer, tighter

conditions will be here to say -- be here to stay. 1970, we had a number of full markets and emerging-market currencies and this -- it has been 11 years of running prior to october of last year and if you look at the growth in privates. we are talking equities primarily and it is still a pretty big number but this just shows the amount of these liquidity conditions, these -- how the engineer all the stuff that is out there in private land and that is going to rear its ugly head if conditions remain tighter for longer. rising energy prices, copper is up five out of the last seven years. talking about the bull running commodities, i agree with you. lisa: to the fundamentals matter if you get a prolonged selloff in the dollar? damian: not anymore.

i think the dollar is the beast that keeps kicking. there is so much noise that goes into what drives the dollar, but the dollar is really the kicker. when the dollar moves, everything seems to wake up and follow. we could talk about fundamentals until we are blue in the face. tom: very quickly here, what are the emerging shadows in e.m.? just barely percolating, this discussion of shadow banking, shadow economy. the telegraph did a great job of this in davos. what is the e.m. shadow -- damian: india and mexico have huge -- shadow financing, which is kind of illegal. they are publicly traded companies. tom: are they names we know? damian: they are in your portfolios if you are in the emerging-market.

some of those bonds are in there. it is not a sustainable model for funding eight -- funding a sustainable economy. those kinds of shadow funding sectors crop up because they can't bring dollars -- lisa: i've already got messages saying you are so do me and gloomy -- so gloomy and doomy. you see the shadows that could potentially rear their ugly head. what is going on? damian: talking about the bull opportunities. look at ukraine and the value and the unprecedented support for that economy. they've got a lot of dollar bonds out there. some people are going to look for value their. you talk about the elections in nigeria. the labour party is coming -- is promising to re-profile the debt.

argentina, the whipping boy of emerging markets have announced a buyback program. tom: a sloppy gross ugly game. let's move on to -- a dream match of eagles and 49ers? this is what the networks and all that in the betting world is loving. damian: 1.5 point spread. the eagles look awesome. the defense looks great. cmc, the 49ers are good but the real story you hit on was that snowball. joe cool. he was throwing lasers in a blizzard. i don't think i've ever seen anything like that. tom: to be fair, is 49ers/eagles the real super bowl this year? damian: absolutely not. if anything i am more impressed

-- the chiefs and the bengals looked to be the favorite but the eagles look good. both will be very tight games if vegas gets their way. tom: is the betting just growing in leaps and bounds? ferro's bet, i don't think his mother knows it but he remortgaged the house today. damian: lincoln field in philadelphia, you can actually see the hotspots of them hitting fan dual and draftkings. we can field more than any other field in america by far. it was lit. tom: we are always lit when damian sassower is with us. lisa: you keep saying that.

watching the game? tom: he is in the stand. it is like wrigley field in chicago. it is this tiny -- i don't know. i wave to him when i come into heathrow. lisa: he actually eats his pie correctly, unlike you. tom: this little pie thing and some but it comes up to me as i'm sitting there. she says you are eating the pie wrong and they had to show me. lisa: you do not do that. tom: we will come back. jon ferro is with us as i have pile over my face. this is bloomberg. stay with us. ♪ (upbeat music) there's more to business than the business you're in. (robot whirring) want smarter factories?

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♪ >> investors are really realizing now that a serious growth slowdown is probably ahead of us. >> this may be the weakest year i can remember in terms of forecast. >> very simply put, inflation has peaked, and that is what we

have witnessed in the last six weeks or so. >> the market is leading the fed on the way up and the way down. announcer: this is "bloomberg surveillance" with tom, jonathan ferro and lisa abramowicz. lisa: welcome back. tom keene, jonathan ferro come lisa abramowicz. jon is in london. it is quiet because the fed officials aren't speaking at of next week's meeting. we are able to focus on the real stuff. tom: a lot of economic data here and i'm going to go with how i start of show this morning. we are going to get a first look at q4 gdp in 29 minutes and i'm sorry, it is recession gloom and we are popping on a 10 year basis, 20 year basis, normal gdp. i don't get it. lisa: people are saying things

are going to turn the corner and you have this sort of belief that we are going to have a good first half and a bad second half. like the initial take was reversed within the first week. mike wilson continuing to say we are going to see something that really pushes back. tom: bank earnings show the idiosyncrasies of it. i can't pronounce it. i am barely awake here. morgan stanley, your interview with james gorman and goldman sachs, and a few others, maybe we get that through it all. the most important conversation of davos, you guys were brilliant with gorman on the national debate which is work from home. i thought that was just spectacular. lisa: right now if you talk to any executive, they are sick of it. the work from home experiment

that just didn't work. aspects did work and it is not going to put the genie back in the bottle, but you aren't necessarily going to get the all work from home situation. there aren't that many but the number of people looking for work from home jobs is just extraordinary. tom: my theory on this one is if you sustain work from home you get a compensation shift because people have to travel. many of our viewers and listeners have a commute. and it is demonstrable if you are not work from home. lisa: it was interesting, even jim frazier. citigroup is one of the pioneers. she talked about retrading people if they were working from home. there was a feeling of frustration that i saw pretty universally between all of the executives. tom: i'm going to look at the

bloomberg financial conditions index telling me we are not restrictive and mr. powell has work to do. lisa: we were initially negative but now positive on the margins across the board heading into the open. basically flat. we did 4000 before some sort of reckoning, or do we keep on climbing? it is honestly the strongest going back to november. i do wonder how long we continue to get that. strongest since april, i should say, as people look to the expected winter -- warmer than expected winter. how much do we see the expectation of hawkish initial that hawkishness pushing that higher? tom: you can see it right now on television. for those of you on radio, 82.44. brent crude rounded up $89 per barrel, it is a different world at $90 per barrel and i also would point out the idea of bitcoin trading right near 23,000. you've got a feeling of that big

equity lifting out on friday. right now there's no surprise. intelligent conversation in london with jonathan ferro and he has mr. steely of jp morgan. jonathan: we were just reflecting on the fact that -- with an iphone 4. tom: it was embarrassing. people coming up saying "where's ferro?" i kid you not, it was painful. jonathan: i need to hold your hand all the time. i'll be back in a minute. i wanted to start here because i think this is really important. in the united states, you ask about the debt ceiling and people say "not this again." is anyone asking about that across europe? >> to be complete the honest, no, not really. the odd person is starting to think about it but we've been here, we seen the movie. the reality is at the end of the

day, there will be some resolve around it. jonathan: do you think they should care? iain: not yet. you need to wait until we get to the stage were actually there is going to be a material impact. we are not seeing that yet. the markets, not particularly focusing on it. i feel that we had over the last few years, this isn't the first time we had these conversations. there's a lot of other things going on in the world. iain: jonathan: if the debt ceiling hits the fan, we buy the 10 year treasury? the answer is yes. do you see the answer changing? iain: probably even more so now you got some yield. we were happy to buy the 10 year treasury when there wasn't much yield on the 10 year and is time there is. i definitely think that will be the case. jonathan: there hasn't been any yield for several decades. that is a massive focus for folks in london, u.s. well. there was a meeting back in

december. the meeting minutes suggested that the government officials actually requested a recess. do you think the government is happy with it? iain: when you look at where inflation is in japan, it is not walking seen in the u.s. or europe, that is going up. at the moment, the policy looks with what is happening. the reality is they don't want to cause -- i don't want to liken what is happening in japan to what happened in the u.k., but they don't want to see that level of volatility. we are going to get there, but on their own terms. they are obviously doing this to try to keep financial stability. we are going to get there, is inevitable. but they need to do it on their own terms. jonathan: the two words i want to talk about, normal and market.

japan is the next one to normalize. i said what is normal? i've got no idea what is normal in japan. the other word i want to talk about is the word market. is there a sufficient market with private demand both domestically and internationally for japanese debt for when the boj backs away? does it exist? is there any sign of one being there right now? iain: that is going to be a challenge because obviously the bank of japan own a huge piece of the market, particularly 10 years and in where they have been looking to control yields. obviously we are going to see the market being priced to where it should be, but the reality is there is a huge amount of securities owned by the bank. jonathan: we don't know if there is a market. iain: if you track the 10 year yield on top of the 10-year treasury yield, and you see

treasury yields move higher over the course of the year, they suddenly had the upper bounds. before that, there was a pretty good relationship. you are talking somewhere 70 to 75 basis points given with a 10 year treasury is. that probably seems as a good start. it is going up. we've got wage negotiations coming up in april. i think they are going to have to let that go. jonathan: i know you've been reflecting on that. should they find the boj? iain: they want it on their own terms. at the moment, they are trying to push some of the short out of the market. if you've got a long-term deal that you can hold back, yields will be higher over the medium term. jonathan: what kind are you thinking about? iain: 25 basis points on the tenure. jonathan: have they grown beyond that kind of number? i'm looking at things taking place across fixed income and the central banks. the ecb, they've got officials

running out all over the place at 50 basis points, 50 basis points. in that world, is that bullish or bearish for fixed income at a time when i've got pretty much everyone with fixed income saying "buy bonds." is that bearish or bullish, fixed income? iain: it depends which part of the fixed income market you're talking about. the u.s., we've got more evident over the last week or so that we are having a slowdown in retail sales. we have the fed who want to slow down from their pace. the bank of england, they are behind the fed. we've only just got to neutral. what is neutral in the japan? maybe we will find out. europe is particularly interesting at the moment because we are in a world where they were hiking rates to deal with inflation. now inflation is more likely to come off because of the high energy prices. that should be good for the economy.

we are supposed to be in recession in europe at the moment, and we are not. is the ecb going to have to go slower but further? there is a dynamic between wanting to own u.s. fixed income and being a little bit more cautious and some of the other markets. jonathan: i ask this question earlier and i'm going to ask it all week. does the ecb hike more than the fed in a 2023? iain: yes. jonathan: seems to be the takeaway at the moment. tk, that is too guest to have both at the same thing. this ecb in 2023 set a hike more than this federal reserve. tom: i look at it this morning, the first time was the ecb on the financial conditions index and they are way behind the improvements we've seen both in the united kingdom and the united states. if you go across the bridge today, you are out there watching the game, and i've done my research. the next time -- i don't know why i'm not with you now. bramo said i don't want to be alone. the stake in whiskey pie, i

talked to them, they said they will even teach me how to eat it correctly. jonathan: i will send one back, maybe get you a couple of frozen ones. tom: bring a brace of those back for the team. lisa: do you microwave them? jonathan: this is the one day of the year i think our friends in new york time are happy we are talking about international football and not your kind of football after what happened with the eagles. tom: i agree and frankly, i like the pace of english football vs -- it takes forever come american football. jon ferro in london all this week with important conversations as well. lisa abramowicz and tom keene here in new york. futures, they go green. stay with us. great guests in the next hour with ferro from london.

>> keeping you up-to-date with news from around the world with the first word, i'm lisa mateo. in california, authorities are trying to figure out the motive for a mass shooting in an asian community near los angeles. 10 people were killed when a gunman opened fire in a ballroom during lunar new year celebrations. the suspect, described as an asian male, was found dead of a self-inflicted gunshot wound. poland will ask germany permission to send german-made tanks to ukraine. on sunday, germany's foreign minister said if berlin were asked about the tanks, it wouldn't stand in the way. the failure to work out an agreement on tanks has overshadowed to send more military aid to ukraine. the justice department has found more documents containing classified information at president biden's home in delaware. fbi agent searched the home for more than 12 hours. they are said to have found classified notes from the president's time in the senate

and vice presidency. spotify is the latest tech company to cut jobs. the streaming giants that it is cutting the employee base by about 6%. the company has about 9800 employees. before today, spotify stock had fallen 58% since the end of 2021. global news 24 hours a day on air and on bloomberg quicktake. powered by more than 2700 journalists and analysts in more than 120 countries. i'm lisa mateo. this is bloomberg.

♪ >> i currently favorite 25 basis point increase at the end of this month. beyond that, we still have a considerable way to go but i expect to continue tightening policy past this week. tom: one of my favorite, favorite people in monetary policy is christopher waller. he is a research horse from st. louis. he is one of those people who was weaned on doing, creating, and reading 30 page pdfs and he has prodigious abilities. there's all different types, lisa, at the fed, and he is the research one. tom: and you have the -- lisa: and you have the others coalescing around the view that the fed needs to do more, but

perhaps not much more. tom: the economic data we are going to see including important data here this morning. let me get that up right now. we've got a leading index here at 10:00 and then tomorrow we go into a raft of economic data staggering to the 26th of the month. a little bit of lift to the market just like what we saw on friday as well. dow jones industrial average, we are about to stride up on 4000 on spx. the equity market now, i want to go back to my great mentor in london with a definitive book on history and the travails of capitalism and the economist has always said profitability matters. where in the world do you see profitability? is it income or is it of the

income statement? >> this is a great question and a really key question for 2023 in particular because last year, 2022 was really about striking margins particularly relative to expectations. the analyst consensus in rising margins to the course of 2023. we have started to see in this earnings season, cost cutting is what is for the dragging the earnings. companies are actually missing on stamps. the first time since the first quarter of 2020, 2019, we are seeing the s&p 500 miss the expectation but nonetheless beat the earnings expectation. profitability is becoming a very important factor for performance, and i do think we will see that continue to perform all year. tom: i understand sector to sector particularly banking is nuanced, but if revenues are lighter because of disinflation,

and we come down to gross margin and then various margins and then we waltz over to free cash flow, which measure of profitability is the one to study? >> we check operating margins very closely. to your point, it is very difficult to do when thinking about the inflation sector. nonetheless, we do look at operating margins. for nine of the sectors excluding financials and real estate. the operating margins are on expectations for most sectors so far this season. what is interesting in the broader landscape is the reason for the sales miss, and i think that is really important to understand why our company is missing sales and what companies are missing sales, and most of it is because of the decline in commodity cost. we are seeing concentrated and expectations for energy and utility companies as opposed to the broader index, which has serious consequences for what

you're thinking about in terms of inflection on earnings. we believe 2023 will be a year where you see earnings fluctuate more positively into 2024 because of this margin dynamic. but i think we want to watch really carefully over the next several weeks. we really kick up earnings this week with about 90 companies reporting. we see the next three weeks of the most critical and most consequential for really framing that outlook for inflection on margins, inflection on earnings. lisa: so what do you make of all of the narrative that you have companies that are not going to lay people off because they couldn't get workers during the pandemic and they have been scarred by that? so they are not going to lay off workers to cut costs and they are just going to see it in the margins. is that a myth, or are you starting to see that? gina: that is very industry by industry. you are correct that a lot of the cost-cutting has come in the tech space where we saw some of these tech companies double their workforce.

we are seeing somewhere between 5%-10% layoffs into 2023. i do think it is industry by industry, sector by sector. there was limited hiring in some segments where they can find workers so they are not necessarily going to get the margin benefit. when you look at the true weakness in margins and focus on the operating lines, the areas of weakness were concentrated in the tech space. it is the communications stocks in particular but also the tech companies. to a lesser degree, consumer staples and some consumer discretionary companies where you have some issues with margins. those are the four sectors i think you watch most carefully. the rest of the index is going to be less about margin, significantly more about sustaining revenue growth through the economic cycle. but we can't paint the whole index with one big brush when it comes to this issue. it certainly is much more

idiosyncratic risk at the company level and then even broader at the industry level. lisa: i was reading mike wilson's comments over the weekend, pretty consistent in this message. the question is when will equity industries that indices priced the leading data? they believe it is this quarter. how do you push back against that if you don't necessarily believe that you're going to see that margin compression? gina: we all can argue about how much occurred in 2022. our models would say that in the downdraft we saw in september and october, we already priced a pretty significant earnings recession coming into 2023. it is a difficult time in the cycle because investors are scared of this economic recession, but the reality of the earnings stream has been in recession for more than a year. we look at overall unadjusted earnings, they peaked at the end of 2021. they are down about 7%. they are already expected to drop double digits over the

course of peak to trough. there is a degree of weakness that has already anticipated. i think we are starting to see that with the earnings season where they have double the average pace. companies are certainly not being punished with price declines. from that respect, we've already priced a weakness. i think you do have to have further evidence that things are going to get much, much worse for stocks to react extremely negatively in the first quarter. tom: very quickly here, i've got another lift in the market. we saw the big lift on friday and all i do is go back to 73-74 and back to back two years. what precludes that from happening again? gina: the inflation dynamic

certainly reminds us all of the mid-70's or even the early 80's which was a love volatility in inflation. that said, i think you do need to understand where you are in the economic cycle and what has been priced by the equity market. it is extremely important to understand that equities do precede the economy. equities do price what is likely to happen in the economy over the next 12 months over the prior 12 months. what we are doing in the equity market analysis that we do now is saying where are we going to be in a 24? that is framing your outlook and your positioning and frankly, our work would suggest we will be in that recovery by sometime in 2024. that means 2023 is an inflection year for the u.s. equity market where you start to rotate into early cycle sectors. you start to think about high-volume. but you have to do so on a company specific and industry-specific basis with

inflation risk still relatively high. tom: thank you so much. starting strong on monday on the equity markets and a big lift on friday. we are already seeing futures up 9. lisa: that was my fault, you're saying? lisa is reversing futures. when is bad news bad news? we asked about that last week. this will be a week of discussing that. tom: when is good news good news? we will do that. claudia sahm. stay with us. ♪ there's a great deal of uncertainty in the u.s. economy. one of the challenges for businesses is how to skillfully navigate these difficult times.

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tom: thank you for joining us on economics for this investment and economic international relations. haven't even touched on ukraine. i would suggest picked up and got some steam to it. jonathan ferro in london, look for his effort here in the 29, 30 minutes. a great set of guests lined up. real money at risk and has to make real allocations forced into the market. cash is not a luxury, that will be interesting. an interesting conversation. lisa abramowicz rumored back from davos. is that right? do you have let jag?

lisa: you can judge in about a half-hour. it is great coming back from europe with the jet lag being somewhat convenient to the schedule. tom: it works out well. lisa here will get through the week. mr. ferro in london. lisa, the labor unrest in the united kingdom as well. a little bit of a pop to the market. don't want to make too much about it. let's rounded up, $89 per barrel. maybe that is the thing to watch into february. bloomberg conditions indexes is miles from restrictive as well. she's usually controversial. always brings up a fire of emails and social.

really thoughtful about this identification of inflation, the link to the labor markets, some of the older theories that maybe don't work and some new research that needs to be done. i want to get to a thoughtful thing, a more theoretical thing. high inflation cures high inflation. that is foundational. >> we have to remember the federal reserve does not set prices. and yet, this is an interplay of hundreds of millions of american consumers and tens of millions of his nieces. as someone who follow consumer

spending very closely, the retail sales last week were kind of a punch in the gut. the american consumer, this is 70% of gdp. businesses need to get the signal. consumers will get price-sensitive. the businesses, they have got to price it in and tamped down that inflation. tom: all the great inflation worked on over the years. a small start up school on the banks of the charles river in boston, massachusetts. i want to talk about the new effort which i think you are in link with, which really says we need a more rigorous analysis of where we are. the heart of what she is saying

is that we think the fed has too much power. moving this great disinflation, like demographics. just as one example. do we put too much weight on the fed in terms of their ability to fix things? >> i think that's absolutely the case when we think about the real economy. the federal reserve has big effects and financial markets. and yet the mandate is in inflation and in full employment. my big attempts to draw attention to the fact that one of the reasons that we've had so much inflation is our economy was not resilient. whether it was supply chain or underpaid workers, those are not levers that the federal reserve can pull, and we have learned in this crisis fiscal policy is powerful. we spent a lot of time getting it right.

we've learned a lot about the fed, but it is not the most powerful tool. lisa: last week one of the conversations behind closed doors of executives, of companies, the last payment was made in 2021. but that was the main driving factor of inflation, you disagree? >> is the beginning of 2023. is absolutely in the next. we also took a big dent in consumer spending when everything shut down. there is still a lot of pent-up demand. it really was affecting workers on the job.

really important disruptions to the daily lives since stimulus checks went out. there is also been a drag on fiscal policy that has a lot to do with some of the weakness we saw at the end of this past year. lisa: not a lot of faith that they are going to actually do something on the physical side to address further beyond the inflation reduction act and beyond based on the lack of fiscal impulse and what is going on of the monetary side. do you believe in a soft landing scenario or do you not think that is early optimistic based on the empirical evidence? >> as we come out of this and inflation comes down, this is going to be a bumpy ride. do you really think every month after this is going to be

smooth? this is something toward the end of december when she questioned some of these simple models of inflation. this is going to be a bumpy ride. to me, it is not as much about the soft landing. it was very disruptive getting away from normal, but i think that is the goal. the fed needs to see that. it is not just about hitting 2% inflation, some magical point in time. they really have to believe it is sustainable. tom: if we are trying to get back to normal, the show that we have done here in 2023, part of that is that they will be change, they will be technological progress. that is all fine, but it pushes

us away from the gloom of caution, of secular stagnation. years ago, lawrence summers has picked it up to great effect as well. you've really pushed against that. there is some optimism that we could get back to normal and move to secular stagnation. how do we do that in the coming 12 months? >> if nothing else, the past two years have been a big question mark on the idea that we are just in the slow growth state. for the first time in several decades, we had a -- recovery. the idea that there is something fundamentally dragging down the economy, we should put that into question. when you mentioned before about demographics and ecological change, these can be weighing against that recovery. and yet it is also the case that we were much less destructive to workers and businesses through this recession, and that matters

in terms of do we have long-term scarring or do we have some long-term hope for this economy? lisa: what are you looking at data-wise? what are you looking for it to know whether we are going one way or another? the most telling of the indicators. >> i'm absolutely looking at what service is spending. retail sales, back of the rebalancing from goods back to services. we need to see that. when the consumer is rebalancing, workers rebalance, we've got to take some pressure off of laces that don't normally have a lot of spending. and yet if we see services spending that looks like what retail sales did with a 1% drop, that is a different flag in terms of losing the consumer. that is a big piece of it. obviously i'm looking at wages because the fed is looking at wages, and yet they are slowing down. i think the fed issue is to be

boring and i think they are on track for it. tom: let's make a pact. the fed can be boring, you can't. thank you so much. always controversial, pushing against some of the main tenants of economics. she really lays out the argument that are going to be had. i've got to bring it up here. i'm sorry i don't have it memorized. we are all fixated on february 1. i want to get up to june 14, july 26. does anyone have a clue what the stead meetings will look like? the answer is no. lisa: people are trying to figure out whether it is and 25 basis point increments or not and that halt and remain there for a longer time which means throughout july, throughout september, going through there and not necessarily cutting like the market is pricing in. what i find interesting is the empirical data. job searches are taking longer. there is a story about how a growing number of companies respond to a survey planning job

cuts outside of the tech sector. there is this question that isn't showing up in the numbers. how big a pressure is remains to be seen. lisa: what is so important here is in terms of caution -- not gloom, but caution in some form of economic malaise or economic soft landing or economic slowdown, contraction, recession, is it happens quickly. there is a huge respect across all that, to your point, when it goes, it goes into the fed. 3.5%. 4.5 percent inflation, or does it unravel? lisa: the snowballing effect. somebody can't spend as much and you get all of the negative impacts feeling on each other which could lead to some sort of bottom, some sort of catharsis. people are saying is going to get pushed out, does that mean it will be short and shallow?

that whole discussion you've to be consensus. tom: we will have to see. markets are down. i do the data check, markets go up. features of 7. i'm sorry, it's important. bitcoin on the age of 23,000 for those keeping score. brent crude, around it out. that has my attention. the dollar stronger after a weaker dollar morning. please stay with us. jonathan ferro in london coming up in the 9:00 hour. this is bloomberg, good morning. iain: lisa m: keeping you up-to-date with newsom around the world. authorities say the suspect in the shooting deaths of 10 people in an asian community near los angeles as killed himself. the attack took place during lunar new year celebrations. this believed the suspect tried

to carry up a second attack nearby. in the u.k., workers are walking out in the biggest strike by first responders. trade unions are processing pay levels. they are demanding a double-digit pay hike. in france, president macron's government is moving ahead with a floorplan despite threats of more protests. it would raise the minimum retirement age from 62 to 64. more than one million people took to the streets to protest the plan. more are set for next week. bloomberg is learning the president biden will name his next chief of staff today. he's a former business executive who was one of the chief architects in biden bidens initial team. he will replace -- who believe in the coming weeks. the white house chief of staff is among the most powerful figures in washington. and hedge fund elliott investment management has taken

a multibillion-dollar activist stake in salesforce. the firm says it is looking forward to working constructively with the business software company. shares of salesforce have plunged 2021. global news 24 hours a day on air and on bloomberg quicktake. powered by more than 2700 journalists and analysts in more than 120 countries. this is ge aerospace, advancing flight for future generations. ♪ welcome to a new era of flight.

>> we're not seeing huge demand and high yield so far this year. what we are seeing is more technically-driven. there is no supply. we are still anticipating a widening of high yield spreads. timing that recession is difficult but we do see that recession at an aspect tend to

widen to 800 basis points. tom: we've been doing a lot with jp morgan recently and i must say we've got a diverse set of opinions attempting to game a recession. the 9:00 a.m. new york time, i go back to what mr. podesta is doing and the idea of two quarters of decline, you know it is a recession way after it a recession. can we say we are in a recession right now? i hear a lot of people walking away from that. lisa: because there have been a number of surprises to the upside. china reopening, more is a positive than the potential reflationary impulse. more than expected weather has really helped europe, so a lot of people think we are ok. does that gdp print change anything? tom: we are going to have to

see. to me, this goes to the economic data. what have high yield spreads done after europe? they can continue constructive, right? lisa: a little bit of a selloff when you had a little of the oil and equities and constructive once again. people seeing the opportunity for yields more than the opportunity for default, and that highlights that people are looking through this and seeing corporate strength regardless of financial costs and potentially weakening consumers. tom: what we are going to do right now is speak to someone who invented it. i really can't say this enough. i'm going to go back to the shock and awe of charts from 1880 and through the early part of last century. in the 1940's, there was dropped upon us someone who said you can plot a stock and you can draw lines to support resistance. one of his great disciples -- to

say he is a chartered market technician barely describes his contribution to looking back at what price tells us about forward. ralph, honored to have you with us today. i want you to discuss the modern idiocy over catharsis. we need catharsis to make a bottom in the equity market. have you observed catharsis that drags us out of this bear market? >> absolutely, tom, thank you for that kind introduction. i have to stress october 13, tom. the dow had a price ring of1502 points. no one is talking about it. that is called a key reversal day, when the lower of the day and a high of the day proceed the previous day's high and low.

that to me was a major turning point. since then, i've -- to the december 13 high. the dow is up about 21%. s&p is up about 18%. there's been a nice recovery and since then, the market has been consolidating. i think we are making a bottom long-term in this market. tom: the study of technical analysis was done in a time of non-derivative instruments. we now live in a world of etf's, of massive indexation. to the formulas of support and resistance that you helped invent, do they work in this time with the new york stock exchange really isn't the new york stock exchange that we knew? >> i appreciate that question, tom, but remember what technical analysis is all about.

it is following the laws of supply and demand, buyers and sellers. and that has never changed. the emotion of investors has never changed. fear and greed is all manifest in what we follow. if you believe in price, which i do, i don't it owned an indicator, i own a price. buyers push them up, sellers push them down, it is that simple. lisa: on a spectrum of risk in fear, risk appetite versus taking all of your chips off the table, where are we? ralph: for me, i've become very aggressive coming out of that october 13 low. i think since then, if you look at foreign markets like europe, and you look at emerging markets, they have been leading the u.s. market. i think it is broadening out. i would say put chips on the

table. play the game. lisa: what makes you feel like this has staying power? versus a head fake, something a lot of people say is a necessary byproduct of monetary policy. ralph: good question. remember i was talking about october 13? and rallied to a december 13 high. since then, we had a pullback. the dow has dropped about 6% or so. and those levels right there, we are looking at 32,000 on the dow and 3764 on the s&p. those are very short-term support levels. i keep my ike closely on that on a long-term basis. and i think we are holding up well. tom: i want to get back to the

issue of the day, the failure of the american retirement system because people are in and out of the market. we are at one of those markets -- moments were millions of people are saying how do i summon the courage to get back into the market? i'm going to go to what you and i were weaned on. of course, earl blumenthal. they knew when to have the courage to get into the market. how do you get into the market like you did in 1975? >> when you say get into the market, you made participating in trading? tom: i am in cash and i need to go long. how do i get back in the market if scared stiff? ralph: being a technician, you got to look at levels. in the days ahead, literally in the very short-term, the next

couple of weeks, just watch because we are in the early seasons right now. we still got a lot of dialogue about whether it is a recession or not. if we could hold above that october low, which i think we will, that to me would be the final test. the next couple of weeks, volatility, we hold above those lows. looking out toward the second half of the year i think we are going to be in pretty good shape. tom: ralph on technical analysis. honored to have you with us today. i can't say enough about the legacy of this and the idea of what technical analysis does. one of the first heated conversations i had a bloomberg. with great honor to the late gary trickle, bloomberg has terrific technical analysis as a general statement. what this is about is trend. you are not in the market.

how do you get on the trend? how do you stay on the trend, and when it did you have the courage to get off the trend? of all the people we talk to, the one that alludes back is someone like chris. lisa: to me, it is interesting to hear how you can judge some sort of more objective sense that spectrum of where we are. and that has been a huge issue of contention at a time when a lot of people are looking for silver linings and finding them in real developments vs. people who say it is very hard to see how this monetary policy can end up with something. tom: my experience on this within the daily surveillance babble that we do -- jon doesn't do babble in london. it is wildly asymmetrical in that his world, maybe it doesn't help me get into the market, that is a different set of decisions, but boy, does it help

when you want to get out of the market. that is really where technical analysis does much better. lisa: the death cross. tom: she is pushing my buttons. do something about this. the death cross -- it is absolutely useless. don't get me going. lisa: right now, look at the fundamentals. it is hard to get a handle on the fundamentals which is the reason why technical analysis perhaps is interesting to look at as well free feeling of the supply and demand ralph was talking about. tom: a wonderful john murphy. you've got to use them all. technical, fundamental, and a little bit of economics. next. ferro in london.

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jonathan: the countdown to the open starts right now. ♪ >> everything you need to get set for the start of u.s. trading. this is bloomberg, the open with jonathan ferro. ♪ jonathan: live from new york. another day, another tech firm preparing to cut jobs. morgan stanley says stocks are pricing week data. we begin with soft versus hot. >> we have seen very mixed signals. >> all of the