>> we are seeing upside surprises in the data. >> the thing we don't have is global growth. >> we need to see if these dynamics play out. >> the idea this is all behind us, that is too early. >> it is hard to say recession won't happen as a venerable rule, i think all the paint is still to come. >> this is bloomberg surveillance with tom, jonathan ferro, and lisa abramowicz. tom: good morning, jonathan ferro in london and it is

contraction wednesday. the bottom line is gdp comes out today, it is going to be a good number and that is it. lisa: we've got seven straight months of below 50 reads in the pmi's we got yesterday. what does that say in terms of what the growth is and whether that is already baked in? tom: it is an odd terminal screen today. let's talk the data checks before we go to jonathan ferro with an important question in london. futures down, vic's showing some good news. but in the bond space it screams economic slowdown today. the real yield, and look at the two year growth. lisa: it highlights the volatility. tom: why do that auction yesterday matter? lisa: it matters because it

gives you a sense of whether people see value in the short term, and it will have to go further than people believe. people are calling the fed's bluff and saying we see value and to me that tells you the mood and how much people are willing to push back. tom: we will be what jonathan ferro in london coming up here. i'm looking at the twos tens spread, really -- talk about space, it is in a new space of his inflation. lisa: disinflation seems to be that theme although we got a read from australia in the last quarter that inflation accelerated to the highest level in decades. on the one hand, yes. and on the other when you think about, -- economies affected by the chinese reopening, are we getting a sense that things are plateauing at a slow pace? tom: microsoft yesterday afternoon, we have the drive

that forward. at 4:00, 5:00 p.m. ish, it ebbs away a little. lisa: the actual results were above expectations but it was all about the guidance. looking forward to month the possibility of cloud computing and the growth they're followed by four to five signage points or three to four percentage points still at a high pace but concerns there. tom: i want to make clear we are seeing movement in the bond market that you need to focus on, the economic data today. the two year yield comes in its six massive basis points, the 3.50 10 year, now 3.43. in the bond space it will be 3.59% inflation. it would be shocking to see a .99% to 10 year real yield but we are not there yet.

lisa: fighting the fed it seems to be the same. at 10:00 a.m. we get the canada rate decision. the bank of canada was ahead of the curve in terms of other central banks last year. are they going to be ahead of the curve in dropping the pace and how much they hike rates? we have seen those two year yields plateau as well. 1:00 p.m., five-year notes. i do take a signal for how much demand there was yesterday for the two year yield. to be get the same kind of readthrough in this option and the earnings grind? i can't say enough about how much the entire schedule this week leading into the gdp report tomorrow will be about earnings. microsoft shares lower, ebbing away after delivering strength in the actual earnings. but the guidance, everything. today we get tesla and ibm after to continue with tech. and before that we are waiting for kimberly-clark to get a read. tom: we will be watching off the

headlines, earnings report if you will. and what is going on in london, jonathan ferro starting the day, up at the crack of 10:00 a.m.. he's got one of our favorite guests within this morning, what you have? jonathan: i am not shaving. i'm waking up at about 6:00, having a nice breakfast, sync family and friends. let's set the stage, into 2023, the consensus is clear. first half is tough, we've got to pay the bill. second half is better, you get recovery. the year starts and everyone is wrong. the nasdaq up today, the euro stocks 50 here in europe up about 9%. max kettner of hsbc said get on board. i have to say, you are the man i wanted to catch up with.

the note from a couple of weeks ago, i will share the quote in case our audience missed it. there's -- bears holding a 22, massive underweight, and you said this cannot we see a variety of reasons to be less bearish on risk assets in the next half. do you like what you see so far? max: so far yes, but we've got to be honest there's been some easing in the bond side of things. not just cyclical strength but on the bond side. that has been taken pretty positively by risk assets and that is part of the reason why the nasdaq was outperforming, i growth and tech stocks were outperforming. if we look at the consensus i do think we've got very pessimistic expectations. everyone is saying earnings expectations are still too high. i don't disagree with that but i disagree with the sequencing and the timing. if we've got pretty much everyone agreeing that age one is going to be tough, economists a graying like they have never

agreed before, look at the philadelphia fed survey on this recession. it is the highest in 50 years. we've got consensus on the probability of a recession, factors driving it and the timing. what is the downside surprise? what is the downside surprise to earnings? if you have seen q4 and now in q1, earnings revisions down particularly in cyclicals, consumer discretion, mega caps, i t and commute patient services. what is the actual downside? i would argue if we get an average recession it is not going to be like this is a massive surprise. this is why we need to get buried. no, what we need is to get something properly going wrong. we need to have something break and then you can be. . jonathan: you thought it was upside risk. we've got a squeeze, let's be clear. i'm trying to work out the

durable tailwinds for this market. everything you said, a lot of people on board. what is durable about what we are seeing? max: it is still durable because sentiment and positioning is still downbeat. we have updated the aggregate real money positioning study monday and that shows underweight positions and in high-yield credit. historically has been really the case that you see outright underweight positioning. the same thing if you look at cta equity. they are still down, in level terms they are still down. equity is massively underway. none of it is telling us so yeah, everyone has already gone bullish. if anything, we've been talking to clients of the last two or three weeks, the biggest pushback we got was know that everyone else is already bullish, therefore i have to continue. jonathan: right come out let's break it up. microsoft this morning or after

the close yesterday, how many messages did you get saying look at microsoft, you are wrong. what did you say? max: i would say it is not the time yet to be full on maximum overweight equities. with that i agree. it is mostly tactical. look at what is pricing for the fed for the next two meetings. got less than 50 basis points priced into fed funds cumulatively. just going to come out next week and say were going to go 25 but we will do another to 25 in march. even that would already be a slightly hawkish surprise and that would weigh on high multiple tech stocks and valuations again. a bit of a higher rate, bit of a higher real rate and that means weighing multiples in tech. tactically i don't like equities. i'm not massively bullish on equities just yet. i would say in a muddling through scenario where you say it is going to be neither here nor there, we are muddling

through in terms of growth, a slow grind lower rather than a solution down in recovery. -- a swish down in recovery. all of that, you just turn over. jonathan: let's talk emerging markets, morgan stanley yesterday, get on board, they're not alone. that is become consensus. can we talk about domestic u.s. credit? city came out yesterday -- citigroup came out yesterday and have ideas to buy triple c's. do you want to go right into quality tech and triple c's? max: it does make sense. if you look at triple b's and compared to pmi's, if you look at triple c's versus double b is, it looks much fairer priced relative to where macro indicators are. you can argue the weaknesses

priced, particularly if you compare it within high-yield. weakness is pretty much in the price so that is good. it will be much more worrying if we talked about the macro side of things as well. one pushback we got is we had people saying look at this cannot it is 45. jonathan: who wants to buy credit? max: my answer is simple. i would not turn constructive if it was still at 55 or 60 because they are now leading indicators with still a point down and saying we've got another 10 or 15 points lower, be careful. now you are i-45, and this is exactly what i wanted to see. let's get on. jonathan: you make it sound simple. it is not. max kettner of hsbc. the holder must year, getting constructive fast. tom: a nice switch there and it comes around in the earnings season, microsoft is fascinated to see the lift yesterday. a sigh of relief and then a real

question about cloud dynamics. our reporter of bloomberg was insistent they will endure. jonathan: wait for the guidance is what i heard from him yesterday. deceleration and growth. we have been piling into that growth story in the cloud, microsoft and elsewhere for a long time. now reality is starting to buy. tom: we need some guidance, what are you coming home? jonathan: i'm hoping perhaps the weekend, it depends. i'm enjoying this. tom: your forward guidance from jonathan ferro in london, stay with us, -28, this is bloomberg. from london and new york. lisa: keeping you up-to-date with news from around the world with the first word, i'm lisa mateo. germany and the u.s. will provide significant upgrade in

firepower to ukraine against russia, berlin will provide 14 of its leopard battle tanks. biden administration is expected to announce today it will offer the abrams tank. in the u.k., the spending watchdog will cut forecasts for growth. the office for budget response ability told chancellor jeremy hunt that it overestimated the prospects for medium-term growth, moving the government with a multibillion-dollar hole in its spending plan. chuck schumer is telling republicans, show us your plan. humor and democrats want the gop to offer a proposal for raising the debt ceiling and avoiding a default. kevin mccarthy and other republicans are demanding spending cuts in exchange for increasing the borrowing limit. i downbeat forecast for microsoft. the software giant says revenue growth in its cloud computing business will decelerate in the current period and warned of a

further slowdown in corporate software sales. and shares and companies controlled by billionaire are falling. well-known u.s. activist investor said it was shortly the empire stocks. they accused the market of accounting fraud and manipulation. someone calls the report malicious and baseless. 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. bloomberg. ♪ this is ge vernova, helping generate

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>> we always act to govern with our allies and friends. we support the ukraine as long as it is necessary and in all the means we can use, but also always avoiding that this war is escalating to a war not between russia, that this is going to be a war between russia and others. tom: the story of international relations in the last one he four hours is tank warfare to come.

the german chancellor yesterday, finessing the story with leopard spots on. another story right now, for us to rip up the script as we do at bloomberg surveillance, this is really timely and important. at the washington post, and our simon kennedy for bloomberg advancing the story of what i am sorry come out would be a shock. it would be unconventional, which is a senior officer of the fed moving over to 1600 pennsylvania avenue. lisa: at a time when a lot of pivotal decision-making is happening at the federal reserve. even if the vice chair lael brainard is not the person placing brian deese, even if she's not roof -- selected for that, it would be in interest to wonder what the relationship is between her and the biden administration. brian deese is leaving the position and lael brainard is the frontrunner to become his replacement. tom: i thought of the wonderful

lady from road -- rhode island, gina raimondo, she made clear that she is not up for it, does not want the position. will go to annmarie hordern in a moment, but you look at the people, i'm sorry it is a political position. nobody is worried about a phd in economics. lisa: this is what i'm wondering about come out what is the liability if she stays? let's say she is not named the head of the economic council, are there allegations with -- of political interference with the federal reserve at a pivotal moment for them to make decisions about how far to raise the rate in terms of what the balance of risk is. tom: already in the democratic corner by many on the other side of the aisle. annmarie hordern, our chief washington correspondent joins us. principle one, what is the job he has now? annmarie: it is critical as the

president is delivering higher inflation, and there is a number of economic issues when you deal with gasoline prices, grocery bills and maze economic sanctions against russia, which has created a number of back issues and supply chains following covid. it is also dealing with lawmakers on the hill to make sure they can get some of their legislation passed through. and it is connecting the dots between treasury, their own economists at the white house and throughout the entire administration when you think of commerce, trade, special envoy john kerry. this individual is part of all of those conversations. we do know the reporting has been, and people we have been speaking to, that brian deese is leaving, no one is walking out the door before the state of the union on february 7 but they have been in search for his top job. no decision has been made. a number of names have also been pointed out to me but i think we should make clear there has not been a decision on who is going to be the national economic

council director. lisa: how unconventional is it from a historical perspective for administration to target a top federal reserve official for an existing political position at a time of such importance for that central bank? annmarie: it sounds very unconventional but biden has spent a lot of time with lael brainard. he thought of her as being treasury secretary, putting her in the number one spot at the fed and decided to do a roll over and went with jerome powell. on monetary policy she is voted in line with jay powell. the thing that makes her stand out on the fed is how she feels about regulation. she is a lot more strict on that, how she feels about how the fed should look at climate change, how banks should look at the risks with climate change. these differentiate her. she is liked within the democrat circle and was able to be

confirmed by the senate and many would regard her in washington whether they like or policy -- politics or not, when it comes to economics, they think like yellen she's incredible talented. tom: it sounds like you have drank the political kool-aid here. i think you're onto something here. the list of victims the washington post mentions with simon kennedy of bloomberg is a list of names including jean sperling, whatever you think of as politics, and redo is the advisor. this is a demotion for lael brainard. lisa: i don't want to get into her potential decision-making and you can discuss they demotion. but there's another element to this. love your insight into this. brainard has been on the margins , dovish, yet she has been voting in mind but she has been raising issues about the balance of risks and the concern of overtaking and killing economic momentum.

how compromised issue politically? how much does she create a liability for the federal reserve at a time of such controversy heading into a downturn for the central bank? annmarie: i understand there could be controversies with her name because now she is being discussed for a political job and she is a number two at what is seen as an apolitical job with the fed. but i really do not think -- she has not been picked yet. if she wants to be picked, then these questions become more important. but she has not chose yet. and i think at this moment, yes, these names you are reading out, jean sperling, his third time doing this job, these are political names. but i think there is a lot in her that biden feels like he could talk about her in a bipartisanship way because she is an economist. tom: right now, we are misty eyed. and with annmarie we welcome a new offspring to our washington horde.

we are pleased to mention the issuance of edward hated shirley. -- hayden shirley. all is healthy and wonderful. the child is immediately buried to the left in the incubator there and needs to be understood that we are fair and balanced here. we need some lessons here for our more balanced edward hayden. annmarie: he is very cute and congratulations over to matt and britney. i can't wait for him to start booking guests. tom: exactly come out what you think, six months? annmarie: get him a bloomberg terminal. tom: we can do that, in his crib. thank you so much, really important. lisa, i think you are right here about the unusualness. i have never heard of this. lisa: especially in this moment.

we have been talking about the potential political quagmire that comes later in the year when you start to get the question of are we in a recession, are we going to see layoffs that have not come yet if the fed is still hiking rates? this creates a problem especially. if she is chosen, how quickly are they going to create a replacement for her considering the delay in 2021 at a time when inflation was exhilarating and people say that was part of why the fed needed to start hiking sooner. tom: as annmarie hordern says, nothing is decided. no one has heard from the vice chairman. it is an eclectic group of name -- names the washington post has. this has to be done by the state of the onion. lisa: initially he was expected to stay there through the state of the union. assuming they are certain to get the list.

tom: the next hockey coach at dusk hockey coach at middle barry. an important take today in front of economic data including a look back at q4 gdp. i want to emphasize a pullback in equities yes, but far more really interesting bond market, 4.15% and the two year yield. yields of cumin six basis points at that two-year level, thunderstruck and the inflation, the 10 year real yield to come out 1.15%. bonds on the move speaking of economic slowdown. from london and new york this morning, this is bloomberg surveillance. surveillance. ♪ we can do anything. cheesecake cookies? [together] the chookie! manage all your sales from one place with a partner that always puts you first. godaddy. tools and support for every small business first.

tom: bloomberg surveillance, jonathan ferro in london and we will go to him in a moment. lisa abramowicz and myself in earning central as we look back. time used to stand still, you are too young to remember this. ma bell. nobody cares. lisa: the big industrial and the classic utility companies, whether they will be more important at a time of more stability, what i find interesting is they missed it when they came to certain

aspects of their earnings. but next year, the capex increasing more than people expected. i'm going to stick with this kind of theme for the earnings season. tom: we want to see as well and then tesla this afternoon, it is not a small matter. the former will come up in a tesla discussion. lisa: is it a tech company, a car company? is this a leading indicator for next week, we get some of the auto manufacturers and amazon and google and some of the other tech giants, i don't know how it's being accounted for. tom: moffat nathanson, sterling doing a great job on microsoft and moments ago they lowered their target price, tweaking it down from 26232 268. the back-and-forth we see in this nascent earnings season.

right now, on a greater economy and the european economy, sharing exceptionally thoughtful notes for capital economics. good morning to you as well. we are coming up on a one-year anniversary of this war. what does year two look like and what does your two of the war mean for christine lagarde? >> we are only a year in edit feels a lot longer, the keyway this is affecting europe's economy in terms of commodity prices and caps prices, and the start of this year has been dominated by what is happening in china, the speeches from the fed officials and others, u.s. inflation. what has crept under the radar, i think, is effective the european gas prices absolutely plummeted. natural gas prices now a third of what they were almost six

weeks ago. the ecb is not out of the woods, the colleagues of got more works to do but the colleagues i've gotten a lot more easier. tom: do they have a nominal e.g. p -- edp spirit to act like the united states? i'm not convinced they disparate nations of the european spirit have the oomph to prosecute the jay powell method. neil: that is right, there are many more competing views around the table and a lower natural gas price helps the inflation. best picture because it reduces the price of natural gas. that feeds back into the economy by supporting real incomes. they demand picture starts to look better. they push back against that. i don't think they are out of the woods yet and coalescing and

coordinating that policy response will get difficult. lisa: there is a lot of discussion that perhaps u.s. is past the peak aired europe as close to the peak. we got a show you overnight with inflation passing expectations and accelerating the last three months of last year. is that significant? neil: it is significant in far -- insofar as what is happening in the australian market is interesting. for most economists, the month-to-month gains will start these, and month for month it really matters, the base affects will get more favorable as we had to this year. and it will come down. what is happening in the labor market is key because that is driving wage pressures and that is what really will affect wage inflation, price inflation 12 or 18 months ahead. that is why i think australia is interesting.

a very tight labor market, we are not seeing signs of core pressures easing to the same extent there. that is what the fed will be concerned about and the ecb will be concerned about too, happening in the euro zone. lisa: this question of how do we get a sense of the labor market and whether that strength in terms of wage gains is continuing and has legs. do you feel like that is the case or do you think people are right to say that even that is really cooling-off? neil: the first case is missed back to the labor market, it comes down this year, -- there are signs of hope and it looks like the labor market starts to loosen a little and it is a key indicator, tiktok at in the last month but has been on a downward trend. there are some encouraging signs but you've got to think pretty

deep at the moment. tom: the economics to some thoughtful stuff, i will call it 30,000 or daresay 60,000 feet. it has been a pandemic recovery, it supply-side dynamic with monetary guessing and monetary theory. we're supposed to shift back to something we knew or maybe move on to something original. where are we right now in that movement from a pandemic adjusted economy over to something "normal"? neil: there are two things happening here. first, how does the pandemic fueled inflation surge play out. do we get back to something approximately in the goldilocks era of 2% inflation, 3% nominal rates, a bit lower. probably we do get some thing like that but like we say come

out we really squeeze this information out a bit further. the second and more tectonic shift is what is happening at a geopolitical level. the pandemic has masked this but splintering in the u.s. and china i think is deepening in many profound ways. you got the meeting, that i think is going to shape the global economy over the next decade or so, a big story. tom: we have a dearth of fed speak, neil sharing, we are going to use you as our fed speaker today. but the basic idea here is we have got to find economic growth. that can be real gdp that somehow migrates back to a 3% run rate, very few people are looking for that, or a nominal gdp growth which is all messed up with the current and pleasant -- present inflation.

to be go back to the great moderation, which everybody suggested was too subdued except for the habs? the only ones advantaged by at where the elite class. neil: that question, i think there are two parts. what extent is it growing and at what rate and how do you share that pie? on the real gdp side, i think it probably is the potential gdp growth and advanced economies, i don't think it has really shifted. probably one issue in the u.k. affected by labor problems here. it is higher in the u.s. but not much, 1.522, maybe, and then as the inflation story, i think the maximum danger on inflation was perhaps 18 months ago when the fed was talking about it being transitory. result talking about flexible inflation targeting, central banks going a bit soft on

inflation. such has been the surge over the past 12 months and i think that argument has died at death and gone away. central banks have been aware of the inflation targets and reminded of the pain they have to impart if it gets out of the bottle. that is why i'm feeling a bit more confident about inflation and the 2.5 rates ahead. lisa: you're talking a lot about the shift in narrative and it has swung my--swung wildly. it is going to be a rough first half. now, europe is doing really well and they are out of the woods. china is coming back online, it will fuel growth. as the narrative gotten ahead of itself? neil: i think it has. x rotation is the starting point here. in the u.s., the data has fallen off a cliff. the data yesterday was a bit better. but the indicators are falling

sharply. the euro zone is improving at another level. we came into this with expectations particularly low and perhaps too optimistic in the u.s.. we had some adjustment, not necessarily that the u.s. is underperforming europe or europe over performing the u.s.. tom: what about gdp? neil: china's gdp come out we think will be about 5% this year. quite a rapid reopening and -- in q1 and q2 come up with an in the second half. tom: neil sharing, greatly appreciate it. -- shearing, appreciated. i guess the way to put it is the three economic systems bouncing off each other.

bill -- abel bill rhodes and be central banker to the world. i'm not sure if powell can be there and the pacific rim. lisa: we did get the headline that the first german leopard 2 tanks will be deployed in ukraine in three months and this follows a lot of controversy in germany about whether or not to join with the u.s. to send takes over the ukraine, to protect the nation against russia. i do think this is a fraught discussion for a nation that has tried to shy away from a lot of the military effort for the past couple of -- tom: i don't have it in front of me but somebody that has been active in the discussion has actually been in the tank. heaven forbid we speak to someone who knows what they are doing. ben hodges, general hodges of the united states army. i don't have it in front of me

to do the full quote justice, but he says look, you take these things and you move forward. it is not the movies. lisa: there is a belief that there is a window of time for ukraine to make inroads before the spring. the weather could be on their side at all of these things. the issue that i have is they war is still going on and the tail risks are still there. this is really a huge effort on all sides to figure out how to grapple with it. tom: we see that with the euro this morning, stasis at 109 on the euro. futures deteriorating, nasdaq futures negative one, 2%. mr. jonathan ferro in london with jane foley, look for that. this is bloomberg. lisa: keeping you up-to-date with news from around the world with the first word, i'm lisa mateo. the u.s. and germany have overcome a disagreement that threatened to fracture ally unity. they have agreed to give their

main battle tanks to ukraine. germany confirmed today it will send 14 of its leopard 2 tanks to ukraine and eventually there will be more. as we just heard, it will be sent and deployed to ukraine in a few months. the biden administration said to announce that it will announce -- it will offer ukraine the m1 abrams tank. movie theaters, travel and box offices showing recovery. the number of movie tickets sold was higher than before the pandemic. the bank of england has headed off the threat of the strike. the 4200 workers, the increase of the overall pay pod will be targeted at lower paid staff to protect them against the worst of the inflation squeeze. google says the u.s. justice department is doubling down on a flawed argument by suing the government on antitrust grounds. eight states joined the federal

government in calling for the breakup of search giants. the lawsuit claims google has illegally monopolized the digital ad market. one of the largest chipmakers, texas instruments suffered its first sales declined 2020. they gave a lukewarm forecast for the current quarter. texas instruments has the longest list of customers and broadest range of products in the industry and that makes its projections and indicator of demand. 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. ♪ 1-800-233-4145 __-- ♪ ♪ i heard about the payroll tax refund that allowed us to keep the people that have been here taking care of us. learn more at getrefunds.com.

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>> most large corporations plan out there hiring and headcount a year, 2, 3 years in advance. then they adjust.

i think what is happening is the weakness became more pronounced and concerns about corporate margins became more announced in the fourth quarter in the middle of that planning process. if you look at ceo confidence in the economy six months out, it is at an all-time low. tom: drew manus with metlife, great to see him yesterday. i thought he was very good about some of the optimistic trends out there and a warning data check suggests economic slowdown here. the yield space is important, 4.15% yields coming in lower on the two-year space come out the 10 year was 350. over two days, seven basis points, 3.43%. two stands gives major inversion yesterday afternoon, come back a little bit, still a very large inversion, 72 basis points. my headline, the inflation ahead of the 10 year yield grinds into a new lower grill yield.

jonathan ferro in london could come up with anything on foreign exchange, lisa abramowicz and tom keene here. i want you to grab whatever you have, i'm having some here, in a crystal-clear cup. but you've got to have your coffee because we are going to bore you to death right now. there is my tank free. senior vice president, of boring you to death, mandeep singh of bloomberg intelligence who is truly excellent when washington decides tech is too big. he joins us this morning while the 150 page document that i was thunderstruck by. i'm not going to mince words. i go back to april 13, 2000 seven just before the great financial crisis where i fell off my chair when google bought the ad business by buying double-click. take us back to 2007, what did google rock when they bought double-click? mandeep: basically they degraded

their product suite. think about supply-side platforms, demand-side platforms and an attic stage in the middle. will has bottom -- products across the stack. if you want to advertise on any google properties, maps, etc., your best bet is to use a google ad exchange because that is how you will get the most targeted ads. that is what the department of justice is laying out here in a very clear way, how they have used that acquisition. they have added more to kind of solidify that because that acquisition was geared toward the web era, then you have a global arrow so google consolidated that. essentially the case they are making is why does google need to be an out exchange when they are one of the biggest publishers out there and one of the biggest demand-side platforms out there? tom: on the day of at&t

earnings, is this equivalent of a request to do a ma bell and breakup the rest of them? is that what we are talking about, google says we are too big and we are going to divest and take an interest in ddm? mandeep: it is not that simple. internet businesses, i'm going to mention the scale. the way you get it is by integrating things across the stack. even apple, that is what they have done for their app store and their hardware. essentially you could argue that the ad exchange piece can be divested, but i don't think it is that simple in terms of taking out a product and spinning out a separate company. there is more nuance to it and it will be a challenge. tom: lisa, are you dozing off yet? lisa: i think this is

fascinating. we take a step back at a time when we are getting these department of justice earnings, they want them to do a divestiture of the major business model. where is the growth going to come from in the technology sphere given that the department of justice seems more concerned about antitrust issues at this point? mandeep: even and they call last night from microsoft, cloud continues, especially the infrastructure side continues to grow very well. 30% plus growth. yes, it will decelerate a little from above 35% to the low. but it is still very strong. if there is any resilient peace, that is the one i think every company is targeting. even google for that matter, they are trying to build their cloud business and that is where you are going to see companies continue to spend on ai and all of the trends are fading into the clouded for structure.

lisa: can you give us a sense of what your takeaway was from microsoft and the morning of the softening into this unit, what to expect from intel, ibm, other tech giants set to report earnings in the next few days? mandeep: a bad readthrough for the pc market. revenue was down 40%. if that is any indicator, we are not in for a quick rebound, that is the readthrough from the consumer side. the pc side of microsoft results. as for deceleration, i still think they are a little conservative as their guide. they have to have comparisons, that's what makes it tough to keep growing 40% plus. but it is resilient. the productivity is coming down because you are seeing these tech layoffs. there is the subscription driven model. microsoft is still indispensable

to enterprise -- we are seeing a slowdown and that will have a readthrough for all of the software vendors. tom: let's go to the might -- united states of america the microsoft corporation. all of a sudden they dropped the litigation. they will tear apart microsoft. going to go on for two years, three years, dare i say a decade and one form of new political washington's is going to walk away after going from alphabet a-z? mandeep: it could happen. this is not new, will has been fined multiple times. what creates a situation for google is they can't make any new acquisitions and they have to create a level playing field. there try to do that with the deprecation of cookies, even on the android ecosystem they are

trying to make sure that every platform has a fair chance in terms of bidding for the ads on their platform. those are the kind of things, the remedies, that is what you're going to get. tom: remedies? we need a lawsuit, united states of america against apple. they need to remedy the fact that within three weeks you lose one of your airpods thingies. that would help more. mandeep singh, thank you. you and i don't agree, i think this is just a comical nuisance against the jewels of america, our technical superiority versus the rest the world. lisa: there's a question about whether you are cramping and it is a debate cannot cramping innovation with tech -- debate, cramping innovation with tech giants. that is the issue. so if the department of justice wants to stop that, these cash cows to be able to go in and

take anyone who is a competitor in order to foster innovation, does it? does that indicate there's going to be a different kind of spending? there is a bigger significance to this especially at a time when this is why the questions come out where's the growth going to come from going forward? tom: i'm going to do a compare and contrast. ryan moynahan and the bank of america, a true banking nerd, lines up what bank of america is doing with their could jillian's -- cajillions of profits to help the towns and the huge parts of the nation on their back. i don't see them doing that. lisa: that is an excellent point. if you talk with the bankers, they are investing how many billions of dollars in issues of climate change and other issues that you can be cynical all you want, it is to try to create a better impression after a really

negative impression of the banking sector for a number of years. his tech going to be required to do some similar types of pr outreach? tom: they don't want to do it. lisa: whether they want to or not -- until the gop starts going after them, they get fines, you have to have more of a lobbying effort. you raise a good question, are they going to have to put more muscle into that? tom: where is ferro to adjudicate? lisa: he is very happily not shaving. you are not getting a lot of mail. people want you to have a beard? how long would it take you to grow full wolf? tom: two or three days. i did not shave five days a week until i was 43. medics singh come out wherever

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>> we are seeing upside surprises in the data. >> one thing we don't have as global growth. >> we need to see if the dynamics play out. >> the idea it is all behind us, i don't think that is true at all. >> it is too early to say a recession will not happen as a general rule. i think all the pain is still to come. >> this is "bloomberg surveillance." tom: good morning. "bloomberg surveillance."

jonathan ferro in london. economic attraction is out there. we are going to push against that here in a number of minutes. for those of you optimistic and say over my dead body, bankim chadha will be with astana moment. -- with us in a moment. lisa: people are getting a sense of what's going on on the ground. what is priced in and what is not? microsoft coming out with better-than-expected earnings. the lookahead little disappointing. tom: to what you and i talked about yesterday with minnesota mining, it's away from the names we love and follow. i'm interested how industrial america reacts. julian emanuel had an important point. excuse me, tyler radke said microsoft is doing what you do. you cut your operating expenses.

because your capex down and the time of stress. lisa: microsoft is one example. the 3ms cutting at 2500 people, it's a very different kind of comparison. it's a little perhaps more hinged to the real economy. tom: i look at the markets and the big change is a real bet on disinflation. down substantially. we are not in the 3.99% yet. lisa: a lot of people looking at real inflation and say it has already fallen to 2%. does it matter? one month does not megatrend. three months might be the real issue. i'm curious about australia and the wage inflation and inflation accelerated in the last three month of last year, pushing against past peak inflation. tom: we need reporting on this. we will do that friday evening. manchester city against arsenal. jon ferro joins us now.

is mann city the only one that can be arsenal? jonathan: that's why i'm here. i tell you what i'm interested in, the data. economic data relative to expectations and different places. if you look at the economic data relative to expectations, the surprise index starting to rollover. that trend in europe started last summer. when you push that through the market think about foreign exchange for obvious reasons. look at the bond market. take the german 10-year u.s. spread. to what degree can we close that gap even more? the ecb hiking interest rates last year to 250, expected this year to play catch up. tom: i'm seeing different series including "real yield."

the bottom line to me is, is this an economic slowness that forces the attention of the central banks? that is the february question. jonathan: it forces the attention of the federal reserve right now. it's a green light for the ecb to keep hiking. we got that from german business confidence this morning. i asked about an hour ago on this program. are there durable tailwinds to the europe story? is this about a positive surprise, a readjustment, or going into recession? then what? there's a difference between recession and stagnation and stagnation in recovery. we are talking about stagnation. the prospect of a real expansion in europe. i don't think anyone is looking for the latter just yet. tom: we have to wait to see the data on that. jon ferro with jane foley in a

bit on foreign-exchange. let's turn to the market. yen off the radar after the last 10 days. sterling at 123. that's enough to get him to manchester city on friday. that will be an exceptional game. lisa: 10:00 a.m., the bank of canada rate decision. it tends to be a front runner of what happens at both the bank of england and the federal reserve. 1:00 p.m., $43 billion of five-your notes. -- five-year note. it is people who want to own the debt because they think it is of value with the yields where they are. this is a fascinating moment considering a lot of people are saying the fed will push back against the market expectations. earnings a focus for me. tesla, ibm after the bell.

some saying tesla earnings will be the super bowl of the season. microsoft down 2.8% after a disappointing guidance. we heard perhaps they are being overly conservative about expectations growth in their cloud computing business. it shows the importance of the azure platform for big tech. tom: this is without question your interview of the day. if you need to be optimistic, there is no better place to be than at deutsche bank with the chief global strategist bankim chadha. please make clear he's enthusiastic. he simply moved his timeline out. we get an update this morning from bankim chadha. you are at 4600. you have never been this lonely in your storied career. one is the timeline when it happens? bankim: what we have in terms of

outlook for this year is really the rally in q1, which we think of as a continuation of the rally that began late last year. i wouldn't necessarily describe it as a bullish view on fundamentals. the basic driver of the rally in our view is a positioning squeeze. since late april of last year it has all been about the central banks. if you look at our measures of positioning, you know, the fundamental investors, the discretionary equity investors very quickly moved out to neutral to slightly negative. what got squeezed is symptomatic strategies. they tend to follow the market. to have this big divide --

tom: i flunked that on the cfa exam. technical analysis is adamant we made in october low in the dow jones industrial average. he is as bullish as you are. there is a short squeeze. we are squeezing out the glue. what's it like after we squeeze out the gloom? binky: we have our year-end target which looks bullish. i would say is little bit more than 10% up from where we have been recently. we see most of that happening in q1. we have basically a call for a recession in the u.s. starting in q3. the second quarter keeping in line with the recession playbook historically. we have the market going sideways. that is still 4500. if the recession happens in q3, a pretty severe selloff of take us all be down to 3250. very important aspect of the recession playbook to keep in

mind if you're thinking out 12 months is equities are pretty robust. if you have a two-quarter recession, they will come back in q4. my q1 target is my year-end target now. lisa: you said something pretty radical. it has all been about the fed, not other issues like earnings which people keep looking at. how do you push back against that? how much steve expect tech to lead regardless of the up or down because of the macro play? binky: our call is to be the rally will be led by tack and financials. -- tech and financials. cyclicals with a price and 120% of an average recession. it starts to make things asymmetric. i'm sorry. i lost the last part of the question. tom: i do the same thing. don't say you're sorry. lisa: it's an interesting issue.

i'm watching earnings and there's a real fundamental shift underneath the market. you have tech that will not necessarily lead in growth. i'm wondering if you see that or if we are heading back to a different normal in terms of leadership back to the same regime. it is dependent on the fed. binky: in terms of earnings for the year as a whole, if you put in the recession likely have, talking about $195. what happens if the alternative, which is a popular question given the market price action, and is more likely to go sideways. you can start to recover. in terms of earnings everybody talks about growth rates. it's important to keep in mind with a levels are. equity valuations come off the levels. earnings have been running well above trend levels.

we have this issue. if you look at real activity on the good side of the economy, it has been going sideways for two years now. tom: 4500 on spx. what he said is religion to me. is it financial tv addicted to change movements. microsoft right now down under $236. he's looking at levels. this is the bathtub story. looking at the water coming in and out of the bathtub. looking at the level. levels matter. the levels, the scale, the massive microsoft matters. lisa: that's why you have a real battle right now of how disappointing some of the guidance was. they are still seeing a lot of growth. they are still rolling off cash at a time when this is still

something that gives them a lot of power. tom: it's outrageous. we have a model out 12 months. microsoft free cash flow of $75 billion. 75,000 billion dollars. lisa: please correct tk. it's clumsy. it's an efficient. it is not that optimistic compared to other people now. tom: he's going up to 4500. lisa: it is the same as the year-end. tom: david called up and said my deepest sympathies at deutsche bank. this is bloomberg. ♪ >> keeping you up-to-date with news around the world. the u.s. and germany will provide ukraine with a significant upgrade and firepower to use against russia. berlin confirmed it will

initially supply the ukrainians with 14 of its leopard main battle tanks. the first tanks will deploy in three months. the fight administration is expected to announce as soon as today it will offer ukraine the m1 abrams tank. in the u.k., the government spending watchdog is cutting the forecast for growth. the office for budget responsibility told chancellor jeremy hunt it overestimated the prospects for medium-term growth. that will leave the government with a multibillion pound hole in its spending plan. chuck schumer is telling republicans show us your plan. they want the gop to offer proposals for raising the debt ceiling and avoiding a default. kevin mccarthy and other republicans are demanding spending cuts in exchange for increasing the borrowing limit. at&t forecast profit and free cash flow missed estimates. it's another sign high-cost our

are hurting prospect for the industry. at&t added 650,000 new subscribers. a down forecast for microsoft. they say revenue growth in its cloud business will decelerate in the current period and it warned of a slowdown in corporate software sales. microsoft has result widespread problems with its online services, including outlook and teams. the company said it was due to a recent alteration to its network configuration. 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 am lisa mateo. this is bloomberg. ♪ ♪ we all have a purpose in life - a “why.”

maybe it's perfecting that special place that you want to keep in the family or passing down the family business or giving back to the places that inspire you. no matter your purpose, at pnc private bank, we will work with you every step of the way to help you achieve it. so let us focus on the how. just tell us - what's your why?

>> for 15 years, we have -- google has halted the rise of rival technologies, manipulate auction mechanics, isolated itself in competition, and force advertisers and publishers to use its tools. in so doing google has engaged in exclusionary conduct that has severely weakened if not destroyed competition in the tech industry. tom: good morning. the attorney general of the united states merrick garland. thank you to mandeep for a look

at the lawsuit. lisa: if this is a harder line from the department of justice, does that indicate you will see spending from big tech go elsewhere? what does that mean in terms of other tech giants? tom: i don't think i will catch you unawares. if we get a republican president or a republican this or that, does the suit change? i don't know. lisa: department of justice is usually insulated from the politics. the follow-on suits. the expectation will be less. it is typically the republicans what, with a less antitrust trust than the democrats. tom: and recorder -- annmarie hordern has real-world experience in europe. over the moscow over the recent years. we are thrilled she can join us right now. have you ever been in one of

these tanks? have you been on a junket with a helmet on? have you ever been in one of these tanks? annmarie: no, i have not. send me. tom: pond dazzled by the technology lead. clearly superior to what the russians have. general ben hodges has been briefing with his expertise in the army with actual knowledge. what can they do? if they get them on the ground and they have a range of diesel engines of 200 miles every fill up, do they just move forward? is annmarie: is deftly why ukraine wants them. they want to be able to not just hold the line in eastern ukraine and be able to get ahead of what they think is going to be a spring offensive by russia, they want to make the inroads into eastern ukraine and get back that land that russia has occupied and holding. the main point you made was that these tanks are far more

superior than the russian tanks. i do know the ins announce. i'm not a tank expert but they have thermal imaging. they are incredibly high-tech. they have been used all over the world. these are the tanks in kosovo, they showed up in afghanistan. i think the main point is that these are the tanks ukraine believes they need to continue fighting this offensive and make inroads in this offensive. the fact of the matter is, once again, you have seen the west unite. germany was pretty direct. we will not send leopards if there is no abrams and now you are getting both. tom: in the british tanks as well. why doesn't this just expand to superior hardware on crimea? crimea is the unspoken story here. is that part of the story? annmarie: it was reporting

recently from the new york times about u.s. officials may be warming up to ukraine looking up potentially having an offensive in crimea or using weaponry to make inroads in crimea. crimea obviously is a little bit different when you are looking at the fighting going on. russia has held crimea since 2014. the new fighting has been more in eastern ukraine and the mainland ukraine. lisa: why has this been such a controversial push? these tanks from germany have been incredibly contested within the nation. what is behind that? annmarie: the vice chancellor of the economy minister told us on bloomberg they do not want to act alone. that he made a reference to obviously we have lessened our defense because of our historical past. this is a huge reversal for germany.

this is literally like moving a tank for them. it is a u-turn in terms of their energy policy, in terms of their defense policy. germany does not want to be the ones that provoke russia alone. for them to make this move -- they wanted to make sure the u.s. was on board. the u.s. argument is the abrams are much more sophisticated, much more difficult to operate. they do consume a ton of fuel. they have a jet engine in them. they are just not as logistically feasible as moving them to ukraine as it would be the leopards. germany was clear. we need the u.s. to act alongside with us. the whole theme as they are concerned about provoking russia. they want this conflict to be within ukraine. they do not want this spreading to native nations. -- nato nations. lisa: how has the psychology shifted? annmarie: great question. what the kremlin said and return to this announcement of more

tanks, the nato weaponry going to ukraine, they will just be destroyed as all other military hardware has been in ukraine. but when you hear from medvedev who was talking on telegram about all of this, he's talking about the fact he is prepared -- russia is preparing for a prolonged war because the weaponry the u.s. will send to ukraine. it seems russia is potentially going to view this as the west is not backing down. even if critics say they drag their feet -- i spoke to ukrainians, and advisor to the defense minister here in the united states. when you going to send the tanks? russia is getting the signal they need to prepare for a longer protracted work. tom: annmaire, we have learned a lot -- annmarie, we have learned

a lot. there are headlines here. they swamped the exchange. i got a reporter with 80 stocks. others with 200 something stocks. they have algorithms that come up with a price at 9:30 in a did not happen. lisa: what happened at the opening bell of the new york stock exchange was that bread-and-butter stocks -- mcdonald's, wells fargo -- plunged by billions of dollars in market value. then were halted. tom: morgan stanley would down 13%. lisa: what is going on here? is it someone jamming the system? is it a glitch in the system? the stock exchange says there is a short sale restriction that is going to be lifted in a subset of symbols. some shortselling restrictions were wrongly triggered yesterday. there were issues here but to me how vulnerable is the system

that has more volume get pumped through it? what is the potential liability? is it just a glitch? they did not necessarily honor some of the traits so it was not necessary -- necessarily that money was lost. tom: it will be interesting to see how they mop up people that took advantage of this in a constructive way versus people -- in an amateur sense of nefarious. it is not like the crash of 1987 where we did not know for three to five days. this is the micro speed we are going out today with the spreads. lisa: is it enough for the new york stock exchange to say our bad? is there something that needs to be done to make sure this does not happen again? this has been a big concern. split-second trading and huge volumes that are trading on that. what happens if there is a glitch or a hacking?

all these issues people have been raising. does this raise the ante a little bit? tom: can i ask why this does not happen more often? it is like the faa and the plain computers of a week ago -- plane computers a week ago. we are all slaves to these computers. lisa: that's a great question. that was good. that is the glass half-full side of things that perhaps we should be impressed it doesn't happen more often. tom: look, if you were triple leveraged in the cash fund, this would not happen. you wake up, look at live board and go back to sleep. -32 on futures. ♪

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tom: "bloomberg surveillance." in washington, jennifer jacobs and annmarie hordern confirming frontrunner status at the vice-chairman of the federal reserve lael brainard to be considered to advise the president and the position now held by brian deese. this will be -- i would say a different vice-chairman post at the fed. lael brainard is vice-chairman is different than richard clarida as vice-chairman. lisa: she is number two at the

federal reserve and has been pushing back on the margins. wrist to the downside in terms of economic pain. there are questions of some of the political interference people are raising. tom: if she was to go back, and the washington post was suggesting the secretary of commerce may be she doesn't want to do that. that is speculation at this time. they are reporting here on someone who is comfortable with policy working with bill clinton on the same counsel out of wesleyan. i believe she was teaching at m.i.t. at the time. i would suggest that policy is where she is more comfortable than worrying about dynamic stay casting -- stochastic equilibrium theory. lisa: she is a respected

academic mind and policy mind. people might get a lot of support behind her even though perhaps there will be questions around the fed leadership and who replaces her and what that means for the federal reserve. tom: brainerd is the front runner to run the biden economic council. deterioration through the morning. microsoft leading that deterioration. -33. visiting $236. jon ferro making note of that from london. there is no question. it is earnings season. individual names? lisa: boeing just crossed. their fourth-quarter adjusted free cash flow is $3.3 billion. we are getting a picture with company talking about pretty good earnings, at least so far. with a bit of a softer picture ahead.

microsoft key among those saying they are expecting a bit of a deceleration in growth in the azure platform. gaining back from some of the lows earlier this morning. tesla shares down 1.1% ahead of earnings later today. a lot of people looking at not only tesla sales, why they are discounting vehicles, but will elon musk talk about the next phase in the twitter saga, when he stepped down, who is going to replace him. at&t came out and this is all the interesting. at&t gave a disappointing forecast going forward. this follows from what we heard from verizon yesterday. shares are up 2.3%. how much bad news has already been baked in? how much pessimism has been established and what levels? tom: we will have to see. the shock to me as it is to anyone worldwide who follows aviation, like jon ferro, to see the headline from the boeing company is that of arlington,

virginia. that will be a shock to all in the middle-age. that describes the traveling syrians of jon ferro in the last number of weeks. he joins us now with an important interview and conversation with jane foley. jonathan: i have to say the travel has been pretty smooth. let's frame the last 12 months. we have been wrestling with inflation as central banks have made a move. ecb has gone to 250. the federal reserve has gone to 450. the bank of japan has done absolutely nothing. is that going to change this year? jane foley is with us. fantastic to catch up with the. subzero at the boj. will that change this year? jane: it might but it might not. that's the critical point. we saw the meeting in january and speculators egging on for a change. what do they get? nothing.

this is the risk. the market is assuming we will get a replacement for koroda. maybe a significant change in policy. we might get a change in policy that it may not be significant. we might get another interest rate hike or we may not. look at the timeframe for the bank of japan. they will probably not be hiking interest rates next year. you have a limited timeframe. look at the fundamentals. yes. inflation is above its target but that's because import prices are not domestically generated which is the golden goose for the bank of japan. if koroda is replaced by a deputy or someone else in the bank of japan, all of which is supportive of the accommodative policies for a long time. disappointment could be coming. jonathan: i think that is what is getting everyone's attention. we have this final meeting with

koroda in march and handoff in april. which chalice carries the most poison? does a hand over a policy set on a path to move away from the yield curve control or does a hand over what there is right now? which carries the most poison? jane: it depends on the outcome of the spring rate runs. indicators are they will bring moderate increase in domestically generated inflation, which is what they wanted to see. that could lay the framework for a change in control, another tweak. will it change interest rate policy? that's a little further down the line and i don't think we can make that decision yet. koroda might be leading the bank of japan but is not the whole board. that ford will not necessarily be changed that much. there is not going to be this massive change towards a hawkish central bank. you might get a less dovish

central bank. jonathan: this was perhaps a want in a generation opportunity to reset inflation expectations higher. he's been doing this for 10 years. please remember when he took us on back in 2013. does he leave, walk away with any success whatsoever? jane: i think there is some success. the whole peter pan issue, the whole psychological issue he thought that if you brought in an inflation target people would assume inflation might be higher and would alter spending behavior accordingly. that really has taken a very long time. with inflation around the globe, this perhaps has given a little bit of an impetus into inflation. there is a little here. you have the government of the bank of a hand -- bank of the pan behind koroda saying you need to raise wages. therefore you get what they are looking for, which is a virtuous circle behind higher wages, higher domestic demand, higher

profitability, etc. there is some optimism this might be coming but i don't think there is a huge amount of confidence they are there yet. jonathan: you implied that could be disappointment. push that through the market for me. jane: we could still see 128 in three months. we assume the dollar is weak and that's a large part of the moving back from 150. 128 is possible. there's the possibility of another movement. they could move away from that in the months ahead. the problem is the window of opportunity is quite short. 128 possible. maybe 126 in the middle of the year. i don't think we will be falling hugely. jonathan: you mentioned the u.s. dollar. we sat here with you maybe in september, the back end of september. looking at a strong dollar.

euro-dollar was 95 something. it has all backed away from that. a 10% move on the x, y. what is durable about all of this? there was a positive surprise. there is adjustment as we move away from the risk of recession. what is your of all about with these tailwinds? -- what is europe all about with these tailwinds? jane: the market has priced in a better situation than it was supposed to be. we were supposed to be in recession for germany. now we have schulz saying no recession for germany. the governors of the bank of france, the bank of italy saying our outlooks are improving. you look at the performance of european stocks this year relative to the u.s. the market has been buying into this better-than-expected story for europe. we have the euro-dollar at 109. how much of that is priced in and how much further can the euro dine out on that story?

it looked this week at the pmi's. they were not that good. as a move into the summer and the autumn we could have another energy crisis. we don't know how cold makes winter is going to be. there are headwinds facing the euro. the market is quite long on the euro. i don't think it'll be easy to push up to another leg. a critical element is the dollar and will the market continue to believe the fed guidance about the interest rate outlook for this year. jonathan: i have asked this question three times this week. two hikes more this year? -- who hikes more this year? jane: it is the same as everybody else. the ecb is likely to hike more. the question really is, is that in the price now or not? jonathan: four for four for the important question.

really important questions for this continent, for europe and the single market for euro-dollar. tom: the year ahead uncertainty. i like your idea. we should do a your head on march 31. you are diving into yours right now. jonathan: i will share my outlook later this week but i agree. it always resets. why not just wait to launch? i don't know. tom: because we are members of the media. a great day there with st. paul's mired in missed. the theoretical physics phd from new york inner-city marco koln vich. we could speak about him trying to extricate himself as an uber bull from last year. lisa: now he is uber bear.

he says people -- at one point is he a contrarian and he's really onto something? the fundamental data is sending a message that is different to some of the enthusiasm we are seeing. tom: a huge lesson here. the distinction of how marco kolanovich approaches this comparative thinking -- binky chadha. marco is trying to be more abrupt and stochastic. lisa: a change on the ground and he has changed in the opposite direction. it is fascinating to me. tom: futures at -32. good morning. lisa: keeping you up to date with news around the world, i am lisa mateo. the u.s. and germany have overcome a disagreement and

agreed to give their main battle tanks to ukraine. germany confirmed today it will send 14 of its leopard tanks to ukraine and eventually there will be more. the administration is inspected to announce as soon as today it will offer ukraine the m1 abrams tank. in china, lunar new year travel and movie box offices are showing signs of recovery. in the first four days of the holiday the number of trips was over last year. the number of movie tickets sold was higher in 2019 before the pandemic. google says the u.s. justice department is doubling down on a flawed argument by suing the company on antitrust grounds. eight states joined the government in calling for the breakup of the search giant's ad technology business. the suit claims google has illegally monopolized the digital ad market. rupert murdoch is dropping plans to recombine fox and news corp.. in a letter to both companies he said combining the two media giants he controls is not optimal for investors.

the controversial deal aimed to reunite the parents of fox news and the fox broadcast business with a print operation that includes the wall street journal, the new york post and harpercollins. the u.k.'s antitrust agency has kicked off of the first stage of an inquiry into broadcom's proposed $61 billion takeover of cloud computing company bm where. it marks the biggest takeover for a semiconductor maker. the european union is also looking into the deal. 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 am lisa mateo. this is bloomberg. ♪ advancing flight for future generations. ♪ welcome to a new era of flight. girls... the chess club has gained an edge on our bake sales.

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that's what you get from the morgan stanley client experience. you get listening more than talking, and a personalized plan built on insights and innovative technology. you get grit, vision, and the creativity to guide you through a changing world. ♪ >> cutbacks have actually rewarded stocks over these last several months. there is a finite aspect to that. when you look at the way reports

are coming in, there is only so much you can do to massage your bottom line if your topline is decelerated. tom: interesting conversation. julian emanuel working with edward hyman on the equity markets. i cannot say enough about his reports on earnings season. you can get that from evercore isi. corporations will adapt. wrapped around that is the call for significant disinflation to move under 3%. vix nudges up above 20. noticing in the fixed income space some real idea of the slowing economy witnessed by a two-year yield to four digits. we are not yet in the 3.99 watch on a two-year yield. that comes in with an eight basis point vengeance. william mcdonough founder and

chief executive officer and a bunch of other titles for element funds. he's one of the wisest people across a span of this thing called wealth management. his managing money in really trying hard to do the hardest thing, which is not lose money. we are thrilled that william mcdonough can join us today. it is wrapped around tesla and what mr. musk is doing in these historic times. there's about eight other things to talk about. thank you for joining us. you said in your research note that the tesla cars are a trojan horse. many people agree with you on that. what is mr. musk up to? william: let's look back to 2006 when he really kick this thing off and his kind of opening mandate for the company was build a sports car, use the money to build an affordable car, use the money to build a more affordable car, and provide

zero admissions power generation's options for the world. he is following that. we need to listen to what he said. i think what we will see from tesla when they report today might not be much. they are starting to realize maybe he is not the optimal person to do the sec communications, much like apple did with steve jobs back in the day. let's throw a black turtleneck on the guy, but him on stage and talk about the cyber truck. let's stop communications with regulators. lisa: i love that. basically how much you could put him in the background. when you say trojan horse for the eeev and the battery, is this a positive for the stock or negative when you look at its longer-term market share and potential? william: it is interesting what julian said. there is a broader war on wall street right now and the chunks division -- juxtaposition between the top line on the bottom line. we came out of an environment

where was growth, growth, growth at all costs. i don't care what it cost to acquire a user, get the user. then the tide went out and we saw that was probably not the right way to approach it. what is the bottom line? what is the revenue? you look at a company like tesla, there is no justification for it being a $1.2 trillion company. we have our perspectives on why that happened. when you look at their numbers they have less revenue than gm, ford, volkswagen, bmw. they have eight times the market cap of ford and gm. what i would really doing here and looking at? we think investors play tesla as a vehicle to get exposure to ev adoption. what are business allows people to do is buy the base metals required for all eeev, all solar, all wind. lisa: what are you looking for in today's earnings?

sounds like you have a strong belief. a lot of people asking questions about the discounts tesla instated in some vehicles. what are you looking for to inform how much you amp up your view? william: i think they will put their toe when the water today. i don't believe they will come heavy. they announced in march they will do their first investor day. they will brand that. there are talks they will launch their own investor platform that will allow for them to engage directly with their investors, much like you m have seenusk -- you like you have seen musk do with twitter. the investors feel like they are doing what they want to do. if i'm on the board of tesla, i'm putting him back in his corner and sang go stand next to the semi truck let us report the numbers and then let's do the fancy stuff and the exciting stuff in march. tom: there are eight ways to go here. i want to go to your experience

not only with bob diamond -- we thank him for coming out recently on the death of scott minerd. i want to talk about your stance in florida in your management of people's money, celebrity management, and this thing called crypto. the bitcoin losses have been taken. the upset of crypto right now which is tarred and feathered. one of your clients over the years, mr. brady who throws footballs in tampa. tell me about the view on crypto? william: i think what happened in crypto in the last 100 days is net positive for the industry. if flush -- it flushed out a lot of centralized players and unregulated players. crypto needs to have a barbell approach to success. it needs to have pure decentralization that allows people globally to interact with it in a fair way. it needs to have a handily

regulated on-ramp that allows investors and scaled to come into the space and trust to the counterparties are. if both are accomplished, blockchain has no end. tom: how does the united states use a regulatory reach internationally given the criminal allegations within crypto? william: the u.s. is the on-ramp for all global financial systems. let's just admit it. the volumes that come in through the u.s. markets, the trade on the u.s. exchanges, this is where the money comes from, even if it is not sourced here. it is managed care. this is the on-ramp to crypto. that is how they can control it. we control how you get money into and out of the system. the good thing about the blockchain's is they are very easy to audit. once you are on the system and we know who you were coming in, i can track what you do while you are in there.

tom: with your immense international perspective, working at goldman sachs, etc., i'm absolutely fascinated how a guy like you feels the department of justice or sec can fix the international regulation conundrum of crypto. how do you envision that moving forward? william: they need to do it just like they have done any other industry in the last 100 years. hunted in the face and address it and embrace it and get to know and understand it. they have come out with statements that have just shown they actually truly don't understand the underlying. i believe the majority of the real players in crypto embrace that regulation because they know that will open of those floodgates for that institutional capital. they just need to really get people around the table that know what they are talking about and put some regulation in place. tom: bitcoin, $15,000 to

$23,000. is it appropriate in a portfolio today? william: i always do. it is trading at year was driven around the fact that people lost harvest into the new year and they could put a little weight. people don't realize bitcoin is not subject to wash rules so there's a lot of trading that occurs. people are leaning in thank you one because the ftx stuff and bad stuff flushed out in q4. i'm not sure how much more bad news can continue to come. tom: thank you so much. very candid william mcdonough with us from element funds. there are optimists on crypto. that is his track record. he's been a real optimist on bitcoin, which is great. what do our government regulators do -- i'm just picking countries out of a hat. do you -- did you play risk as a kid? causing stand, turkey, eastern europe, china, and the rest of

it, how do they reach out to that? lisa: how do you get some sort of unified system in these different nations like can't agree on anything in order to come up with some consistency on payments? that is one of the main targets for the crypto world. tom: let me see earnings right now. 25 companies reporting. lisa: a lot of interesting stories. boeing is interesting. their shares i believe are lower after they had a couple of disappointments. down about 1.7%. kimberly-clark. they were fine when it comes to profit but sales came up shy, which is perhaps part of the reason they are declining. forex cutting off this year by three hundred billion dollars to $400 billion. tom: the breakout i am seeing, it is a hit. it is a strong dollar hit. dxy at 102 right now. jon ferro and london with an

important investment conversation coming up. stay with us. ♪ conventional thinking delivers conventional results. at allspring, we break away with purpose. harnessing data-driven insights and boundless curiosity. we dissect the market from every angle. helping to build portfolios that redefine what's possible. because investing isn't one size fits all. allspring. purposefully divergent.

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>> this. recession the food and energy crisis that was talked about last year is turning out to be

less threatening than expect. >> we see an uptick in commodity process >> maybe we should have a debate are we in a recession. >> we don't think the fed is going to be cutting this year. >> i think we ended the year lower but not of what lower. >> this is bloomberg with tom keene, jonathan ferro, and lisa abramowicz. tom: lisa: the earnings parade grinding ahead of the storm which is next week's fed meeting. jonathan: the vice chairman shows up. jennifer jacobs reported she is considered for a white house position but what's important to me as a real with this morning of true economic contraction i do not want to say recession economic traction.

the four digits to year yield sluggish 4.1373%. lisa: seven consecutive pmi reads in the u.s. below 50 in contraction period. you do see the earnings coming in with softness and expectation going forward. is it enough at a time when you do still have the persistence, particularly when it comes to wages? tom: we get the first look gdp tomorrow. we get mortgage applications coming up and saw them and they were pretty tepid here off of what we saw on the previous month and tomorrow we get the enthusiasm of 2.6% q4 gdp. lisa: a lot of people are looking to this anecdotal data. there is a debate on twitter whether we are already back to 2% inflation.

that is perhaps what is you are seeing in the bottom market. tom: taking a pause, maybe it's an economic contraction pause. why do a data check your to do -- keep you going. i thought will mcdonough was interesting there. lisa: the idea you haven't necessarily seen the incredible implosion you might have seen if you really did believe it was going to get deflated by regulation. we are seeing softness after a bit of gains to start the year s&p lower. you have euro a little bit softer. again, though, a lot of people optimistic. the 10 year yield and the 10 year yield is where you are focused and you are right to do so. yield coming and 3.421. tom: i had, i'm trying to be healthy i had a bowl of oatmeal

and we moved on. i had a barry, i didn't have barry's. others are not having a bowl of oatmeal and berries. that must mean jon ferro is in london restaurant ting and he joins us now after the soufflé. [laughter] jonathan: you're killing me. scrambled egg, just getting the dire gary up for the summer of little bit. tom: i get it. jonathan: i'm not going to touch that story. here's a story for you that is ok, let's pick it up with patrick armstrong. let's start there you are looking at microsoft owned by 2.8% what do you take away from that? >> i think over the last nine

months the big tech companies have been incredibly low falling to 40% and microsoft may be expecting greatness but not crazy growth. i think that is what clout is going through. i think there is a bit of pricing in that you are going to have 40% compounding growth. the cloud business is where amazon gets all its earnings. the retail business is what everyone thinks about it. it's a company that's expensive, apple is a company that is morally expensive but i think there might be more compression. jonathan: it's a decision that could be made to make it painful for you what could the decision look like? >> i don't think they can do it. if you really change the pricing structure where they price their retail goods to get a realistic profit margins that can be sustainable and generate outside

returns on equities we are not in the pricing market to do that. i think amazon is going to do that. they have disrupted retail, but they have not profited from it yet. i think when we go into an economic upswing is when they do that. for the good market environment the multiple trades act, still have a quite a bit of typing. tom: they are done with the workforce from 2019 through the pandemic. are we not going to see that at amazon? is it a different kind of business that doesn't have that option? >> they are going to be cutting, they admitted it. they overbilled distribution so they started to make, not meaningful, but they indicated there's going to be more of that almost certainly. they are overstaffed, technology is overstaffed, amazon has a real world component to it.

it is something they probably saw. jonathan: every tech company we saw is making cuts. alphabet, microsoft, take your pick. we are not seeing that with apple. the name has suffered towards the end of the year walk me through that. >> when you look at the profit margins and china reopening, china was a big myth for apple. having china at zero covid was a big risk for apple products in china and we are moving past that. we are trading at a multiple that is not cheap. it is a dominant company with sustainable profitability. it's got revenues from not just selling merchandise but subscriber fees also. it's an attractive multiple for a dominant market position. jonathan: i just wanted to extend some of the revenue story is challenged by the economic conditions of the moment.

how challenged is it and are we going to start to see the upgrade cycle through the next several courses? >> i think it will be facing headwind. we have not seen any meaningful change in the employment situation. we have seen companies chasing trying to fill job openings. but the hikes we are getting from thanks they have the impact to create the employment. the consumer is not going to be a tailwind but the companies that do have dominant market positions have a product that is not a commodity. i think apple fits in with the luxury companies. i think it's going to face it. jonathan: bank of america put out a note and they are discussing the process but -- prospect of a recession. what do you say back to that? >> i'm not sure what the recession is going to come from.

i think it's going to be a broad-based slowing economy. we are not in the worst economic outlook we feared that it's not looking good. maybe a shallow recession is probably what it gets to. consumer demand will remain relatively robust because people who want to work can find jobs. where the redundancies come from , the highest and consumer food cost, energy costs will edit into that. the really luxury consumer, i think, is where you want to sell because pulling the purse string everyone in the world. jonathan: you say things aren't good, they are just better than they might have been and that has been the story over the last three months. euro stock grouped by 8, 9, 10 percentage points. i'm asking how durable.

>> i closed the short and he the early days of january so i was hurt by that. it's not a move that i've made to go along the china reopening in the natural gas situation in germany i was going to be worried you wouldn't be able to get to energy and we would have a manufacturing recession. i have not really gone long with europe yet but i have closed my short so jonathan: there is a difference. how much over the last few weeks is a short soft? >> i think a lot of people in november and december talked about what's going to happen. the risks have dissipated so i think it's not cutting to get in but closing positions that we are betting against on the downside. jonathan: it's been a difficult

market that's for sure. patrick armstrong navigating some tricky issues but i have to say pick up on the short of amazon, that stands out for me. tom: it will be fascinating to see the way microsoft is going down this morning. again there is an enormous country, microsoft is not good this morning there is no other way to put that. jon ferro in london there and of course he is getting ready for more conversation in the 9:00 hour as well. on the drive back to what you earmarked which is the unusual quote unquote top contender to take over the desk position at the national economic council. this is the position jane sperling had. some will go this is a demotion,

may be modern washington it's not. lisa: a lot of people would say it is not she is number two at the federal reserve. and she is being reporting birth in bloomberg as well as washington post and others that she's a front honor -- runner to replace chief economic council for president biden's administration. what this means in terms of who fills her role, huge question. tom: secretary yellen if she steps aside, is this a steppingstone for anyone including the vice chairman? the politics, the intrigue stays with this. futures deteriorate, -33. this is bloomberg from london from new york. >> keeping you up-to-date with news from around the world with the first word on lisa mateo. the u.s. and germany will provide ukraine with an upgrade to firepower to his against

russia. berlin has said they will supply ukraine with battle tanks. the first german tanks will deploy to ukraine in three months. the biden administration is expected to announce it will offer ukraine the m1 tank. bloomberg has learned that the pfister of the federal reserve is the top contender to be the next head of the white house is economic council. president biden has not made a final decision. brian has been in charge of the council for two years and has not given a date for his archer. chuck schumer is telling republicans show us your plans. schumer and other democrats on the gop to offer proposal for raising the debt ceiling. kevin mccarthy and other republicans are demanding spending cuts in exchange for increasing the borrowing limit. posting a quarterly loss, the results underscore the workflow and it so hostile to do to

return factories to full speed we capitalize on soaring demand for chair travel still boeing's cash flow was better than expected thanks to a flurry of jet deliveries. free's cash flow for this year, the missed estimates. it's another signal that high costs are hurting prospects for the wireless industry. mobile growth was better than expected with at&t adding 650,000 new subscribers. global news 24 hours a day on air and on bloomgerg quicktake. powered by more than 2700 journalists and analysts in over 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.

>> we have to live with the ups and downs of equities markets. we had an excess of 10% since the fed started typing. the real rally, the turning point for the economy, the beginning of the recovery is likely to begin this year. tom: nobody links profit models into economics like dana pearson . we will look at the american economy looking to get ready for that. good gdp report last quarter right now a little rocky i still have to go back to the two year yield 4.14 percent speaks

volumes. it's not the best chart i have ever seen. lisa: i do want to bring you this headline because we have been talking about this all morning. the new york stock exchange and what happened yesterday at the open. they are saying the root cause of yesterday's open issues or manual error. tom: so that's basically like the same guy that was at the faa? lisa: basically someone pressed the wrong button. they said it's involving disaster recovery configuration. there were some shortselling restrictions that were put into place erroneously. i find it fascinating because it raises this issue would you have been talking about for a long time the electronic occasion of markets. tom: here's the answer if i'm lost, i don't one 800 afterthought and she comes in and fixes it. that's the reality. why is the new york stock exchange any different?

if i can't get the printer to work who do i call? lisa: if you are a type professional and you have been laid off dial 1-800-tom keene. tom: what was the disaster besides i think morgan stanley went down low. lisa: wells fargo done on 11%. big news and real questions that need explaining. tom: we are going to have some fun. we are all fixated on the anna and the rest of commodities. we can go 3, 2, 1, will kennedy does that. i thought this was one of the most important essays on hydrocarbon. it was a primal blast scream pay attention to refiners, why should we? >> refining margins look really

tight at the moment. plus refining margins really spiked two unheard of proportions. on of the reasons gasoline and diesel prices once a high it wasn't all about supply. it's starting to come back the amount of money the refiners will make processing the oil and the 3, 2, 1 you mentioned you get through barrels of gasoline and that's bike at $60. it's not back to previous levels but it's still very high if you are looking at crude, it's a signal that gasoline, jet fuel, diesel, what you pay is going to start rising again. tom: a gallon of gas in the united states, five dollars a gallon down to three dollars a

gallon. we've come up 12% as well and i get the refinery tensions that in america. with the war in ukraine, it's not in my backyard has that changed refining in europe? >> this is the other huge story. on february 5, we get sanctions on russian diesel. it could be a big deal. europe was is light on the capacity. to supply it with diesel and we use diesel to move our cars in a way that the u.s. doesn't. stopping that will be a big deal because were as russian crude has found new markets in asia it's harder to see new markets for russian products in asia. asia already has a really big refinery sectary.

if it doesn't happen, some of these products will stay-at-home and it could really be a problem for europe so that's the other point of tension over the next few weeks. this what happens to the prices after the sanctions. lisa: let's zoom out for a second because so far the theme of 2023 has been china reopening with that we are going to avoid a significant recession. have you ever had a time where there is less push and pull of recession and increase demand from china reopening? >> i think it's a good point. i think people find it hard to gauge which direction things are going to go this year. obviously, a severe slowdown could really be a blow to oil and other commodities but i think off-balance people put together china reopening and sanctions we talked about the

lack of new supply coming up on the world. it's starting to fizzle in the u.s.. lack of investment in the industry and people put that together and have a bullish outlook. clearly if the slowdown is a shock for some people and predicting that could end up. lisa: the market sending a different message from the crude market and the other fossil fuels. >> i don't know if it's a different message. a lot more than 10% this year which is far better than any other major commodity. that reflects a play on china reopening, obviously. china accounts for half of the copper demand a big estimate splurge. it continues to electrify the economy and have the supply-side tensions in latin america in

particular. there were problems. it's a pretty bullish picture. tom: real quickly here, when is the next soirée in vienna? >> the next sit-down meeting probably won't be until june. they do have a meeting next week to discuss what they should do just to keep an eye on the market they are monitoring. i think our expectation is they don't see any need to do anything new. they probably hold the same view of the market but things look fairly stable and bullish. i think i feel safer saying this i don't think we will get much volatility from opec in the next few weeks. tom: will kennedy, thank you so much. you can see at their and through all of berenberg as well.

-- bloomberg as well. i have been guilty of this for a zillion years, lisa. it's just so easy to get hooked on the upstream romance of exploring. we are going to draw off siberia and you want to talk about refinery in new jersey. i don't want to look at that. i can read the eight page report. lisa: honestly is this going to be discussed as we potentially get the strategic petroleum reserve and what happens with them purchasing some barrels when it comes to the elasticity because of what you are talking about, the refinery and the lack of capacity there. tom: lack of capacity have to go dent in my backyard. it's full first in america -- full force in america. lisa: what i find interesting is you end up with a number of analysts to say they are bullish

regardless of what crude does. and that basically they are minting cash, they are throwing it off. so there is more momentum before that, regardless of the uncertainties we tried -- we cripple try to make sense of. tom: futures deteriorate. dow negative 246. midpoint between 33 and 34. what am i focused on? it's got to be the deterioration of the two year yield. stay with us from london, from new york, this is bloomberg. ♪

>> a lot of business of runners haven't had to operate in that environment it's causing anxiety which means for us, because you are up and down the country we can spend a lot of time talking to businesses and helping them plan into what that but it is, it is very different. it's not something people have had to process for a long time.

tom: economic data at 830. we move forward here today and talk about kennedy here in a moment earnings and please stay with bloomberg this afternoon for a slew of earnings on radio, on television. our team will climb on board that and give you the trends. microsoft having a challenging day with futures -35. then there is canada. also it's like a big deal with the bank of canada. lisa: only because they were out

front muster when they were hiking rates at a faster clip from the fed and now they are expected to be the front runners, the leaders in shifting down, the step down to 25 basis points. that comes at 10:00 a.m. and that is basically where the currency is treating canadian dollar. it seems to be pricing in that there will be the shift in the oakley won't give a marked -- more dovish message. tom: one of my favorite people which is david dodge of princeton who is the giant former bank of canada governor and he said you are underestimating the risks of a recession. they seem to be having a quick it -- it quicker lisa: sooner than we do. a lot of people are watching the bank of canada. they are out front and really

creating this debate. tom: that sounds like a great screenplay, when canada. lisa: have you ever heard the song? i will send it to you. tom: futures -36 amongst the biggest anticipated conversations. dana peterson, chief of congress at the conference board and this is a conversation, dana, i haven't done this in ages about the economy rate now. what t leaves do you look at to know where we are, the third and fourth week of january? >> we look at leading indicators, our unmeasured which continues to signal the is is probably entering into a recession right about now and people have doubts about the measure but it's still a remarkable job in signaling recession before you have gdp before it even says we had a recession in the past. tom: i look at the u.s. leading

indicators and you on the high ground on this. what is a leading indicator right now? what are you looking at? starbucks coffee sales? what are the conference board statistics? >> housing permits are slowing and that is an indication of the fed's rate hikes working. slowing down the housing market which is definitely a source of inflation we are also seeing consumer expectations be quite weak, new orders for goods are down a number of the other indicators, certainly financial market indicators are showing some signs of stress and weakening. everything is worse with the leading indicators and it continues to suggest that, yes, we are going to have some kind of recession. we still think it's going to be mild and reef. nonetheless is going to be the outcropping of the fed racing interest rates close to 5%. within a few months. lisa: how do you push back to

people who say short and shallow is the new transitory? >> i guess you can say going back to the whole transitory discussion you can't blame the fed too much. they didn't know the pandemic was going to last three years. they also didn't know a war was going to break out. still when we look at food prices, they are still being determined by things that the fed can't control and certainly i think the fed didn't anticipate as big of a run-up in housing prices that are feeding through rent. i think a little bit more sympathetic to the fed and when it comes to recession its art as well as science. i think our measures are still telling us, yes, there is going to be a recession. we will get the gdp data tomorrow but more importantly

the monthly pce data will tell us what's going on in services. we will also see what's happening with inflation. it's still very sticky and the fed needs to raise rates to bring down inflation. lisa: before we go on with the economic picture i want to stop for a minute. we have been talking all morning delete the federal reserve of the fed to go to the biden administration. from an economic perspective does that change the calculus in terms of the different views on the federal reserve? >> we need to think of the f1 see as a group of people, many opinions, when we look at the fcp it's a collection of those opinions. certainly the dots may shift a little bit left, right, up, down. the thing is you will have another person coming in and that person's opinions also factor in. tom: dana, i'm going to get you

in trouble here. are the. plots of the fed more informative than the conference board leading indicators? >> i think they are both important. different measures. the dot plot is telling us where participants think the federal funds rate is going. our lai tells us were they think gdp is going. so both important. tom: i'm busting her chops, folks. the indicating factors, i agree with you it's not the people pushing the site but it's been overwhelmed by all this other data. auto sales, is that a leading indicator, used car prices, things that matter to our listeners and viewers. his a dozen eggs a leading indicator? >> we try to keep it and clean. we do review what is in the basket of indicators, the

leading indicators index. we don't just look at that we look at everything else. certainly we are concerned about things that are not leading indicators like trade and inventory. we are concerned about all of those things. a good economist will look at everything and not just rely on one source. lisa: dana, things people are discussing our pretty intense. the fed has already achieved their goal, they killed off the potential acceleration. where do you stand on that with the potential for some sort of acceleration with respect to oil prices? >> when i look at the components of inflation, certainly energy prices have come off dramatically but there is still the risk that there is a resurgence once china reopens and there is greater demand for energy certainly as that country looks for more oil and natural gas. however, things that are stills

sticky that the fed hasn't been able to tackle our food and home prices and rent, shelter costs are the biggest thing driving inflation right now. tom: i don't want to interrupt but this is the heart of the matter. everyone listening and watching this is going and so when you say when they played out a dozen eggs are the price of a three bedroom in cleveland, you have a model of under 3% inflation forward. it is a dozen eggs and a three bedroom rental in cleveland, are they going to come down so you can get your two point expert inflation rate? >> i have less confidence in the eggs then i do eggs. we see home price valuations for new and existing homes are coming off. they are slowing rapidly that's going to show up in brent's ultimately. it takes a wild from the peak of

where home price rua shins were to where you actually start saying rent. if it's around 12 months or so we are looking at the spring of this year when we will see material slowdown in rent that will help bring down core inflation and consequently overall inflation. lisa: before we let you go there was a story that cup my attention about walmart. they have been raising prices and wages for their hourly workers. from $12 to $14. still less than to amazon, target, costco. how much wage pressure is there that you see percolating up for the people who actually go out and make the economy work on a day-to-day kind of position? >> you have to physically show up for work, those are the also the industries that are suffering the biggest labor shortages. anything that is experiential

like going to walmart are going to the movies are going to a restaurant, those are all the sectors that are still struggling to find workers so the first thing that companies do and that is rachel -- raise wages. it's what they are doing to not only attract talent but keep talent. the higher wage pressures get pushed down to the consumer and that is also leaning against with the fed is trying to do. tom: dana, thank you so much. dana peterson with us. i haven't looked at the eggs. you and i are fancy people. we go in and i have a limit where i shop of 2000 eggs. we all have our stories. summer of 2019 eggs are up 257%. this year alone, eggs are up 140%. what i'm paying for eggs, i

think is cheap. the price at grocery hasn't gone up as much as wholesale eggs. lisa: margin pressure. this is the biggest pushback you get they don't want to spend seven dollars for a dozen. so they're going to keep spending four dollars even if the price ends of going up for the people who are managing that. tom: there is medical staff. this is not just economics like we were talking to ms. peterson about. there is medical, flu stuff. lisa: do you check your eggs before you buy them? tom: for those of you internationally, we go, i check my eggs because they are so often broken. lisa: which is the reason why it's, i always open it up and often the ones that are clear you can hold them up. tom: i opened them but do you open the court on the cob before you look? my mother would get so angry at

the people opening, she was a midwest girl. lisa: oh i know. tom: the snide east coast people if my corncob isn't perfect i'm going to sue someone. lisa: you've seen people actually tear the corn? go to the grocery store go to the garbage can and toss it aside. in other level of disrespect. corn disrespect is something that is very hard in our family. tom: stay tuned for the farm journal look for this weekend. [laughter] futures deteriorate. -41 on the futures. good morning. >> keeping you up-to-date with news from around the world with the first word, i'm lisa mateo. the u.s. and germany have overcome a disagreement and agreed to give battle tanks to ukraine.

germany confirmed it will send 14 of the leopard tanks to ukraine and there will be more. meanwhile the administration is expected to announce it will offer ukraine the m1 abrams tank. in china lunar new year trouble and box offices are showing signs of recovery. the number of trips was up over last year meanwhile the number of movie tickets sold was higher than in 2019 before the pandemic. google says the u.s. justice department is doubling down on a flawed argument by suing the company on trust grounds. states joined the federal government in calling for the breakup of the technology is this. the suit claims google has illegally monopolized the digital ad market. bank of america is rewarding employees with a pool of restricted stock. it's a ploy to retain workers. it is the sixth time the company

has offered such stark awards. and a figure posting our quarterly loss the results underscore the work boeing still has to do to reach for -- restoring demand for air travel. cash flow looks better than expected. global news 24 hours a day on air and on bloomgerg quicktake. powered by more than 2700 journalists and analysts in over 120 countries. i'm lisa mateo, this is bloomberg. ♪ conventional thinking delivers conventional results. at allspring, we break away with purpose. harnessing data-driven insights and boundless curiosity. we dissect the market from every angle. helping to build portfolios that redefine what's possible.

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first time you heard of a town named... dinosaur? we just got an order from a dinosaur, colorado. start an easy to build, powerful website for free with a partner that always puts you first. godaddy. tools and support for every small business first. >> i think there is a mindset in the white business community. there is definition of equity and diversity, onto see money

flowing and capital flowing into black entrepreneurs, more investment and start ups of business. i think if it were easier you would see more magic johnson's and michael jordan's and oprah winfrey's. tom: he is bob johnson, the bet founder in conversation with david rubenstein. this is one of the great american stories. a kid who was near youngest of 10 children and he did that thing that can happen, he was so dam smart as a young kid he was copart into the university of illinois on his way to princeton and created value and many in media. david rubenstein's show tonight, look for that at 9:00 p.m..

mr. rubenstein joins us this morning from chicago. bob johnson was first in early. why aren't there more bob johnson's? >> his view is the white business community gives a lot of lipservice to helping black entrepreneurs but in reality very little money shows up. bob johnson was the first black billionaire in the united states and after he built bet, like entertainment television he bought the charlotte hornets and also me -- ultimately sold it to michael jordan. he is a very wealthy, smart person but his view is the white business community is probably better at lipservice fan reality of helping black entrepreneurs. tom: you live this every day, as we do at bloomberg. the modern finance system co-opted black innovation is what it really comes down to,

how do you see david that we nurture this forward to develop more bob johnson's? >> you have a 200-year-old problem you're not going to solve overnight. there has been a lot of progress in the last for years and much greater emphasis on diversity, equity, and inclusion. but you have a 100, 200 year bias that's going to be difficult to overcome. there are going to be bob johnson's, but still relatively small compared to the population. lisa: back in 2001 bob sold bet can you give us a sense of where the valuation would be and whether he has regrets about selling it since there is a huge audience and it has grown since then? >> he has two great assets bet which she sold for $3 billion to viacom and then with other

things he became the first black billionaire. today cable prices are weighed on and cable values are done because of other means of people watching their news and their entertainment. the other asset he sold fortune room became more valuable. when he sold the charlotte basketball team i think he sold it for three or four hundred million dollars. he probably sold lisa: that asset to sin. lisa:bob johnson is as you said very powerful. i'm curious whether he believes there is more of a comfort discussing rays among business leaders at this time and how to actually grumble -- grapple with the 200 your problem. >> i would say bob is not wedded

to any corporate existence so he can be very free with what he talks about and he would say no. he doesn't think the white business community is as interested in helping black entrepreneurs as the rhetoric is. he would say it's going to take a while before you have black entrepreneurs like him, more prevalent in the united states. tom: i am absolutely fascinated with your study in history and philanthropy to america. you mentioned the media companies coming out of the bob johnson era that are now basically flat on their back with technological disruption. how does carlisle play that? when you sit around and say how would the opportunistic media, how do you go through that process? >> things we looked at years ago, cable tv properties and things like that are not as highly valued or as attractive

to the buyer so you have to find new areas, new technology areas to try to get in the ground floor. the kind of things bob johnson built were just not worth as much today because people don't look at cable as they used to. they use streaming means. a cable channel i doubt it would get anywhere close to the value what he sold it for. tom: not that i need to know your last phone call on what they need to do but you and i have never seen technological disruption like streaming. private equity can run from that what is the rest of the finance -- what does the rest of the finance industry do? >> i think a lot of technology being developed, you have venture capitalists and you have growth capital investors making bets. if they don't know what technology is going to take off

so you make several bets. no one would make one bit. who could have predicted streaming 10 years ago? as a result everybody is weary of making a bet on one technology. microsoft is making a multibillion-dollar investment in artificial intelligence startup. who would have predicted that a couple years ago? places many bets as you can that are reasonably intelligent and one of these will probably take off. lisa: the new asset classes have sprung up and you were talking about the potential for sports teams, as a financial times story talking about music financing is the next big thing and having futures attached to different streaming rights. so clinging to the ip of some of these musicians, are you buying that? >> i do think music tolerant -- technology has changed dramatically and artists are

sailing -- selling at great valuations because now through streaming and other devices people will be able to pay a little bit of a tiny fee and you get to hear all the music you want. i think it's a change the entertainment business completely changed tom: tom:. can you see david rubenstein taking a interview with justin bieber? lisa: absolutely. >> we were involved with that for a while. tom: thank you, david rubenstein. lisa: this is sort of, it's sort of new and sort of not. tom: that started -- >> he was a pioneer with this in a lot of ways. tom: that is becoming more often. david rubenstein with bob

johnson tonight. i think we have to look at futures. -44 we are in earnings season we are going to see that but i would really suggest to people it's not just the equity markets. there is a lot going on out there in terms beginning to model in of what we will see tomorrow. lisa: have we gotten to a point where bad news is bad news? and i don't necessarily mean glass half empty but a negative view bleeding into equity valuations? we are seeing stock futures lower and we have seen that kind of correlation that is more traditional. tom: we have seen evercore, isi, 3% inflation coming dana peterson at the conference board sub 3% inflation -- saw 3% inflation coming. the labor force will start to look after that.

it's january but march will be here and i'm going to go, lisa, last meeting of the summer on july 26 at the fed where they will be confronting according to some of our guests, some serious disinflation. that just leads to endless mysteries. lisa: are you on the short and shallow camp? tom: i don't play the game. i have been humbled and so wrong over the years. recessions are really after-the-fact and the analysis, i do suggest what we saw in 80 two separate and distinct recessions of close together is unusual. jon ferro is in london. he has important conversations. much more bloomberg radio and television today. please stay with us, this is bloomberg surveillance, good

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jonathon: live from the city in london, audiences worldwide, session lows. the countdown to the ♪ open starts now. ♪ announcer: everything you need to get set for the start of u.s. trading. this is bloomberg "the open" with jonathan ferro. jonathon: coming up, microsoft raising gains. the german outlook improves. a top fed official ine