>> the fed wants to see yields higher. >> the fed is hawkish, but they are reintegrating a message that the markets are comfortable with. a lot of structural forces that are not going to bring us back to 0% are almost no inflation. >> what the fed does matters, any matters a lot going global economy. >> this is bloomberg surveillance. >> it is fed decision day.

it i am jonathan ferro cleared equity futures down. tons of economic data and meta- after the close. tom: it is a three-day marathon. can we be clear that the way to dynamic there is important. dominic is coming up, he says there is no evidence of a wage price spiral. tom: what if they have fridays payroll data right now? tom: it will not make a decision in the decision 20 or 15. but it will make a difference of the extended of the spirit jonathan: the month of january has gone just like that. lisa: people aren't listening.

this is why i am exhausted in advance for all of the fed speak they are about to do. it is not about what the fed says. it is about what happens on friday. it is about happens with the earnings we get. the fed is following behind the data. they are not out front. that is the distinction. jonathan: what sparked be running yesterday? the data appeared lisa: we may . lisa: if we get a big disappointment, that could potentially change the narrative and frankly willing to cuts. tom: i do not relate to had jolts today. that is a big deal. that is the kind of data that informs when mckee asked how

this question and then there's this pause. jonathan: if we put what you said together with lisa said we have a perfect problem. chairman powell not answering questions. here's the price action for you as we kick off the month of february. yields coming in a couple of basis points on 18 year. -- 10 year. tom: i strongly agree with that. it is a radically different story. you can disagree with me, which you usually do, i do not think you can inflate the two together. it is about the nominal gdp out there. there's no doubt in america, there's a nominal gdp. it may be too much inflation, not enough real growth.

there's a spirit in america you do not have over you. lisa: this is what i am watching. i am not bored by everything. there's so much more interesting with the fed, that his wife the fed speak is -- that is why the fed speak has diminished. i know you're looking for the expectation for a fifth straight monthly sub 50 read on that number is really getting people's attention. do we see job openings coming down? this is the leading indicator for the employment market russian mark how much is t? 2:00 p.m. we do get the rate decision, followed by jay powell. perhaps the fed speak will not give us as much guidance as our guest, who are actually incredible. our special coverage starts at

1:30 p.m. all of them joining us. after i am watching meta because snap earnings were bad yesterday. how much does apple's changes to privacy really affect matter in the same way? snap shares down 15% after those earnings. it doesn't matter follow along with a given that so much revenue does all from the advertisers -- fall from the advertisers. jonathan: thank you. i think there's a theme. tom: i am going to go without discussion of snap. the yield structure has changed. the gravities returned to the system and the companies without

free cash flow, they are in a whole new world after all. dominique joins us now. jonathan: is this the ultimate hike of the cycle? dominic: it could be. we are close to the fed finishing. i think the key message though, they can't tell you they are about to finish. they will give a hawkish message around that. in the seventh corridor declare that out course, like the bank of -- in the seventh quarter, they can declare that out course like the bank of canada. in the end, i think they are going to be done around 5%. this could be the announcement hike on the back of it. tom: you made worldwide headlines with super restrictive. is this the fed is nearing or end a super restrictive phase?

dominic: it kind of depends on how you look at inflation. we look at it carefully in different ways in terms of the impact of inflation expectations, wage price spirals, and dissecting it in terms of demand drivers. when you dig really deep, i would argue the inflation story is looking good. it is normalizing. inflation was in a whole new regime. when you look at that, when you measure monetary policy in terms of restrictiveness and financial conditions, there is only one conclusion. let us super restrictive. overall, financial conditions are restrictive. there is a danger as eu squeeze out the excess demand of the -- as you squeeze out the excess demand of the profit margins.

that is why the fed is being careful not to push them too high. tom: we will talk about the time continuum of the x-axis. it is an extended period of a rates here or a little bit about purses pushing rates to a higher -- versus pushing rates to a higher up level. could substitute to the migration for a higher rate? dominic: the idea of the soft landing versus hard landing, it is like a sequencing. you can do the soft landing, keep rates at a extended period elevated. in order to avoid the hard landing you need to scar very fast to get back to mutual. that is a story for -- neutral. the danger is not doing

extended, but to keep on raising rates means you have much more scurrying to do at the end of the day and with more risks making a mistake that you cannot move fast enough if you are already at 6% fast. you do a bunch of 50 basis point cuts. it is quite aggressive. this is not a choice versus soft versus hard landing. it is a soft landing until it becomes a hard landing. that is what the fed needs to be alerts, which we expect in 2024. lisa: i am filling philosophical as we talk about fed communication and the markets response. if the fed speak and the markets do not respond, do the market makes a choice? is actually effective in getting the feds message across.

dominic: the fed needs to get the bond market selling off. obviously, the financial condition site if it is basically the dollar and credit spreads -- side of it is the dollar and credit spreads. by introducing this uncertainty around may be peak of funds rates and how committed they are. that is very likely they will do that. i am not sure that they will do that today. they could hint at that. it is certainly likely in q2. he said something sensible over the weekend. mcgreevy -- may be the fed shouldn't recommit to hikes. that would be an interesting thing the fed could -- more

uncertainty around the policy going forward, even if they are effectively pausing. tom: come on, amy. good morning, professor summers. we look for the panel. jonathan: thank you. that was perfect. have human spending time in nature? -- have you been spending time in nature? what was that about? lisa: this is the conundrum the fed has come of their messaging depends on the markets response. if they speak and the markets do not respond, do they get there response across?

this chess game between the fed and the market right now. jonathan: i agree. we asked a couple people was important, the data or what chairman powell has to say. they are the data at the moment. lisa: perhaps chairman powell does not care. perhaps he says, you have a better than i do because you have the collective minds to price out the economic trajectory. tom: i hope to say something sensible the next three hours. futures down 4/10 of 1% of the s&p. live from new york. this is bloomberg. lisa: policymakers of the federal reserve are expected to moderate interest rates and

increases again today. the fed is wrapping up its two-day meeting. jerome powell is likely to keep rate hikes on the table. the central bank will cut later this week. inflation in the eurozone has slowed down more than expected in january. last month's reading came in at 8.5%. vesta just there will be a more heated debate to come over how much interest rates should rise. the u.k. has been hit by its most severe day of strikes in more than a decade. as more than 475 thousand union members are on strike today. they are demanding pay hikes to offset the cost of living crisis . investors learned last week by the malfunction trying to get their money back. claims are likely to exceed the liability pool that covers losses, those losses could total millions of dollars. the crisis of confidence

plaguing government abby is getting worse. -- adani is getting worse. flagship company, nonnie industries lost as much as 20% today -- adani industries lost as much as 20% today. global news, 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in over 120 countries. i am lisa mateo. this is bloomberg. ♪

>> just outside this space, the first piece of the new tunnel is being built, it is one of the biggest parts of the gateway program. this is just the beginning. america sees this project popping up and it sends an important message. we're going to work together like we did in the bipartisan law the chips law. there is nothing that we cannot do. jonathan: the president of the united states. the price action looks like there's going into be federal

reserve decision later on. equity futures down 4/10 of 1%. i really do not know what last month. went. three things to watch, not just chairman powell later, also the economic data later on this morning. look over to europe, euro-dollar 894, positive up one third of a percent. with a months of asterix, whereas germany in all of this? germany is dropping headline inflation should be taken with a pinch of salt because of a data processing problem, that the data for germany had to be estimated and may be unreliable in any case. the key point is that core inflation remains at a record high. the ecb will remain hawkish. lisa: yes come on the headline number you do see a deceleration, it came from

energy, uncertainty in some of these readings. core inflation still very hot. the ecb mayor to does not change. jonathan: expected to go -- the ecb does not change. tom: ok. what is the damage they do with it? lisa: the market is pricing it in. it would be destructive if they want to play five basis points in a way that they did not necessarily -- 25 basis points in a way they do not want. tom: the big part of this, the gdp numbers came in not gloomy. that helps. jonathan: will they go 50 after that? they might be beard do not think i am. -- they might be. i do not think i can.

tom: pvr took them all out. would you do in washington when you got to get the two sides together? annamarie knows this because she is a student. in 2009 it was president obama quaffing beers in the rose garden. maybe we will see that today with mccarthy and biden. there is theater to all of this. what is the theater today up mccarthy meeting with biden. >> this is the first moment since mccarthy took the speakership that these two men will be sitting now -- down together. you're not going to get in news when they reached an agreement when it comes to the debt ceiling, it is obviously what is hanging over that first meeting. it is a chance for them to size each other up. you are correct when you say

this is about watching the optics, watching the body language and seeing the statements that comes out of this meeting. tom: what is the body language that the gop want from their speaker? particularly for our international audience, this is a mystery. this mccarthy one of them? annmarie: he is not exactly one of them. what he does need to show is he can deliver. he had 14 rounds of a chaotic dramatic speakership. he cut some deals with the far right of his party. he needs to be able to deliver on some of these promises, which is why this is going to be incredibly challenging for him, when you have the president of the united states and the democrats who control the senate , saying we are happy to look at the budget and talk about potentially some fiscal reforms, but we will not do it. we will not hold that hostage when it comes to the debt

ceiling. democrats see this as a two lane process. republicans are going to see it as one. lisa: president biden was talking about kevin mccarthy and he says he is a decent man. you have some off-the-wall concessions and then said, this is not your father's republican party. this is a different breed of cat. what is the breed of cat in terms of this leadership for this next race we see? annmarie: we only have one running for 2024. we have reporting out overnight that nikki haley will be announcing her campaign favorite 15th. she is the first -- february 15. she is the first of her former bosses. she is the first that is not to make this former announcement. she recently said, jonathan brought this up the other day when she was interviewed on fox news. you have to look at the

situation right now. those of the leadership match the current problems? she did not think it did. she think she can be the want to left the moment. she is getting in the ring. lisa: former president trump thinks he can match the moment. what is the likelihood he can forge independent race, which really might be somewhat the democrats best option? annmarie: trump, if he runs, he is running on the republican ticket. the fundraising has been lackluster. the new york times goes to the data perfectly this morning in terms of sizing him up versus past early days with the presidential race. you do this with timing to know you can bring in those campaign dollars. with the trump campaign is bringing in is about $200,000 in their first critical few weeks. compare that to former candidates, these were 600000 and $800,000 a day.

at the moment he is not bringing in the moment -- money. khashoggi is losing a group of the party. -- it could show he is losing a group of the party. jonathan: doesn't the fact that nikki haley is getting to run really underscore the fact that he is losing grip on the party. this is an individual who pledged not to if you made a run. annmarie: she says if my former boss grimes, i will not be are trump recently was talking about it and told him, if nikki haley called him and told her if your heart is in it. he has not gone after nikki haley yet. he has gone after the governor of florida. he says florida has been locked down longer than it should have been. this real concern is, governor desantis gets in the race.

it does not look like he is taking aim at nikki haley. it is very early on. we know that mike pompeo might throw his hat in the ring. there is a number of individuals who are sizing up whether they are going to make this case. jonathan: thank you. haley, pens, dissenters, trump? -- haley, pence, d esantos, trump? tom: clearly right now the republicans. where is really important to bring up, i know someone who is as delicate that she never quaffed of shavers were pb are, my first british beer, i

remember tasting it and going, this is what actual beer taste like. is it a fancy brand in england? jonathan: i do not think so. as bud light a fancy beer? lisa: it definitely is. i got family from milwaukee. you know? tom: i am interested. lisa: bud light is not a good beer. lisa: it is basically a low-calorie way to get drunk.

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jonathan: the fed decision just around the corner. one month of gains on the nasdaq and the s&p 500. pretty phenomenal stuff. that might be a wise decision looking at the games. i will talk about people going to florida a little later in the program.

41971 on the 10 year -- two year. the fed is going to take rates closer to 5%, that inversion is worth a long conversation in a moment. 10 year, 3.4846. we did have a downside on euro side cpi going into the ecb tomorrow. we still do not really know what german inflation was for the previous month. we have got to wait until next week to find out what german cpi is. looking for 50 basis points in the ecb. we are expecting that to pick up for china. tom: it has been an event in january. what an honor to have the vice chairman with us. it is about the acuity of market economics. i think it is all going to be

something to focus on. we do that now as rubeela joining us. what has changed on your excel spreadsheet in the last 10 days? rubeela: how households are responding. what we have seen is a decent deceleration of household spending. that is driving our gdp estimates and the slowdowns in the post quarter. were we are seeing on the others is a market that remains very strong. fundamentals by the household balance sheets have not changed that much. tom: the broad thing for our listeners and users is france. things are coming in better than expected. can you say the same for the

united states of america? rubeela: i can say that about the labor market. i can say that on household spending. the u.s. economic fundamental, if you look at the basic driver of the u.s. economy, it is still in pretty good shape, households balance sheets are healthy, drop sheets are very strong. the effects of 400 basis points of tightening are going to start filtering in the economy. they're already showing up in manufacturing and housing. that is going to start filtering through. the news on the economy is probably going to be disappointing over the next few months. jonathan: does the spread between where fed funds would be after the day or whether to year risk spread? does that make sense? rubeela: we talked about this before, with the markets are expecting and the feds are

communicating. it does not make sense. maybe this gets resolved as the fed continues to deliver on its promise. of the funds rate moves closer to 5%. maybe at that point the markets adjust. if you have the other side of it. the message on whether that resonates with the markets are not. the markets have been pushing back for a while. i do think this will have to get resolved as we get closer to the peak rate and move beyond that end the fed continues to communicate that rates will remain in restrictive territory for some time. jonathan: that will be resolved with actions and time? but that in mind, how much do you think the spread between the market and the fed can persist? rubeela: the market is not believing what the fed is saying . i think i can persist until we get to the terminal point.

the issue really is, i think maybe what we should understand is, the fed's message today, we expected to be hawkish. he is going to push back the rhetoric towards easier rates. maybe what is more important right now is to see what the fed and what fed officials are going to signal. i know they do not want to over emphasize. it has been in communications. how many of fed officials expect a easier policy in 2023? those things are going to be important. i do not think communication is going to change or the market pushback is going to change. it will persist until we get to the internal rate. the fed means to be very careful in its litigations. there has been -- communications. the minute that they say they

will have to pause the market, it is going to be even more -- that a pivot to it easier policy. lisa: a reason why this is a gamesmanship moment. let's talk about the data. we have both make of america and morgan stanley saying jobs have to follow below 100,000 in terms of job creation before the fed can get confident with the blessing to be in respect to slowing the economy. how close do we have to be? rubeela: we are not close at all. we are seeing extremely demand for workers that is apparent in the jobless claims numbers. i know we were talking about the adjustment in job openings. they are extremely elevated. we are seeing a slow adjustment despite 400 basis points of tightening. i do not think this is imminent.

they do get a downside surprise on friday. there is a lot of demand for workers that need to be resolved with the same on the supply side. lisa: even without jobs coming down, even without paying, we are seeing this this inflation that seems sustainable. some people coming out yesterday that says if you look at certain metrics, inflation is too low relative to some of the fed's metrics. howdy pushback? rubeela: we have adjusted down from the 9% to the 6% range. where we go from here, that is where it is important and where it is going to take some time. the fed's estimates, this is not our estimates. we do not see that adjustment happening. wage growth is very much elevated in where it needs to be

. inflation is adjusted. or we go from here is important. we do not see -- where we go from here is important. lisa: at this moment with the chairman in his leadership with the fed will focus on domestic final sales, which has been shaky versus the noise around the trade and inventory. do they look a a diminished domestic final sales? rubeela: absolutely. that has weakened. that is something that we are paying a lot of attention to. i think the fed is going to be paying attention to that. the domestic portion, the consumer that drives the economy . that is where the uncertainty lies household balance sheets are healthy. is the consumer at a tipping point, are the experiencing inflation fatigue, what is it? are we going to see a bounce

back that is something that is not clear to us? we do know that inflation is coming down. we know wage growth is elevated. how does the consumer respond after experiencing high prices? tom: i looked into the fed today in were talking to the doctor, we were talking about the idea of an elevated -- extended rate versus a higher rate. you they get the same impact of a higher rate by extending the level near 5%? rubeela: that is the challenge. i think they have to get to that level. i think they have to stay at the level. this is what they have been communicating. i do think this is doable. i do think the u.s. economy can avoid recession. growth can actually remain

positive this year. i do think they can get there and be restrictive until we see the improvement we want to see. jonathan: we will see. we are not going to resolve this debate today. not in this news conference. you make some volatility. ultimately, this market and the federal reserve will be resolved by the, action and time. you certainly have not got enough of that. it tom: i do agree that his major force today is to be first to know. there's no question. look at the scope of the year, the january blur come how do we mentally get to september 20 right now. jonathan: you push up several months, you start to wonder, the big what if this year. it has to be, what if inflation

gets down to four and stays there? then we have a problem. lisa: that we have a political issue, especially if you start to see more paying bleeding into markets. it is easily to theorize what happens when we get to that place. she always goes back to pain in the market. jonathan: chairman powell used that word itself, he said you can expect pain. if we do not get back to august were claims would be, i do not -- i'm not sure what i would have said. lisa: there's a big distinction between the softening and the pain. we are seeing the softening without the pain. it is a process. you can have what looks like a soft landing and that can turn into a hard landing.

lisa: which is what i thought what carpenter had to say with morgan stanley had to say was so interesting. it is slowly and then all at once with the jobless claims with respect to the job creation. too much of tightening. jonathan: nobody has any idea what kind of like there is between rate hikes and what kind of damage it will do. tom: budweiser is of the premier league? is that true? jonathan: if you tell me that is true, i kind of believe it. tom: lisa: are you sitting over there doing research on leader russian beer?

tom: no. jonathan: very special about this time every premier football game before it starts. it is not like best about they pretend it is a atmosphere so they play music. great atmosphere. tom: i am sitting there with a suit and bow tie and i got 10,000 people looking at me. jonathan: futures are down. this is bloomberg. lisa: with the first word, i am lisa mateo. federal reserve policymakers planted hammer on the message that they are working to fight inflation. they are expected to raise interest rates 25 basis points

at the end of their two day meeting. jerome powell is likely to keep further rate hikes on the table while leading against bids the fed will cut later this year. nikki haley left her now she will be running for president. she will be -- announced she will be running for president. she was the ambassador to the united nations under donald trump. the former president raised less than $10,000 appeared global news, 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg.

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>> the biggest risk to markets is we do not get a recession in 2023, the wage growth stays high

in the fed in the second half of the unit end up putting rates up by more than forecast. jonathan: that is the risk for a lot of people. i will catch up with michael a little later from j.p. morgan. this may be the ultimate hike of this quarter, but not of this year. he thinks it is a real risk they could in prematurely. lisa: this actually only margins becoming a idea. perhaps we are getting some situation like you said. they get inflation down to four, then it is sticky. there are signs it starts coming back. jonathan: i have no idea. we are going to be talking about that phrase cumulative timing. it makes people sound smart, but

what does it mean? if you asked someone back in the summer what the data will look like lead the quarter of 2023. lisa: would you describe this market as being tight? has the tightening being transacted through the market through what is going on with price action. jonathan: we have uneasy financial conditions last month that has undone some of that tightening. tom: everybody is picking up some financial conditions. inflation has dropped so fast he uses the phrase super restrictive. we have to do a surveillance correction.

snap is a tech company? i am sorry appeared snap on tools commotion, wisconsin, 12,000 bodies, 16% per year for the last 10 years. 16% per year. snap, over the last five or six years, -6%. this snap a tech stock? i do not get this underperformance in the worship with the companies. do they have any chance of snap of being a profitable company some like snap-on? >> the environment we are in right now, inflation we were talking about it -- is having a impact on digital spending. every company is pulling back on their marketing.

that is trickling down to pretty much every vendor out there. it may not impact google search as much as i did snap chat pinterest or the smaller guys, you can see that every company feels advertising is discretionary. snap is a single product company. i do think they can be profitable because they have 370 billion million -- 370 billion users. because. they have the engagement, i think it is a monetization problem. over time, they did very well for two years during the pandemic. they grew over 50%. they have a problem right now. i think they can be profitable if they keep their user engagement. tom: because of time, i'm going

to go to facebook. pre-pandemic they did 21 billion in free cash flow. they basically have that. has facebook seen its best days? mandeep: yes because they argues -- losing engagement. i go back because ultimately in the internet world you do not have a very long life if you cannot keep user engagement. there will be something new, generated ai or something that will be better. facebook cannot make any acquisitions right now. it is just about the perfect time to add to the business. i do think their best days are behind. they can improve their cash flow and ace technical -- single downturn. lisa: apple security policies that went into effect have

killed some of the advertising model in snap and meta. mandeep: absolutely. they are able to leverage their first party data. previously, they were checking all types of activities for their apps for ad targeting. now they're able to prove their ad targeting based within the data. it is still better than what you see on tv. a digital ads will always have that advantage that media tv does not have. it is a work in progress. it will probably take longer. these companies are redesigning their aspect. lisa: tom asked a good question about whether this is a tech company. sort of the program so that they could come up with.

mandeep: look at the amount of data that these companies are generating in terms of the act usage and everything they are --app usage and everything they are creating. of these are all of the technologies that are currently around us. they're using a lot of computing capacity appeared they have a monetization from software companies, which have a current model appeared that is where you see the volatility, stocks and growth rates. jonathan: bloomberg snap is down more than 15%. facebook down by 1.2%.

tom: he brings a real industry credit. they never really enjoyed were money because something. it is incorrect. it is always been free and always felt like it has been free. jonathan: we have this massive pull forward. on the cyclical immunity, i think a lot of people agree with the spirit of some of these names have never had a cyclical challenge. they never had that before. lisa: snap is the perfect example for them with the first ever expected quarterly decline in revenue.

that gives you a sense because they do not go public in 2017. they have not encountered anything other than growth. how do they adapt and adjust? especially at one social media is moving so quickly. it can they move to some type of metaverse -- can they move to some type of metaverse? we were discussing whether snap had any lasting power. it is a crackle mass of the social use that determines its efficacy -- critical mass of the social use that determines its efficacy. tom: they track each other? tom: what is the difference between tiktok and snap. lisa: it is totally different.

tiktok is more of videos. snap is more of snaps. they disappear. jonathan: generally, if your friends did not show up, you would call the payphone or show up at their house. tom: the first girlfriend john had, everyone else was starring pebbles, he threw a brick through the window. people believe some of tk's stories sometimes. jonathan: meta-is coming back after the close. what have we got, apple, amazon to round out big tech. live from new york on fed decision day. town of economic data coming in

this morning -- a ton of economic data coming in this morning. stay tuned for that. y 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.

>> the fed wants to see yields higher to make sure inflation is down and stays down for a while. >> the fed is hawkish but they are reintegrating a message that the markets are comfortable with. >> they have to be very careful about signaling they want to cause a cut before they know it is the right time. >> what the fed does matters and it matters a lot for the global

economy. >> this is a bloomberg surveillance with jonathan ferro tom keene. jonathan: the federal reserve decision coming up this afternoon. good morning for our audience worldwide. this is bloomberg surveillance. futures are a negative third of 1%. are we looking for 25 in this federal reserve? tom: the real version we saw yesterday is -71 beeps. it is a great set of guests to set up the optionality now, what will chairman powell say about his choices? his degrees of freedom out to entering meetings out. jonathan: the financial conditions we have seen over last month. lisa: he could talk about indicators he is watching.

there was a story about super court inflation. this is a new frederick -- super core inflation. there are ways they can tweak it. will the markets listen to him? jonathan: he says tom, it is continuing to look like a soft landing. he says to eci which data is coming down. he said none of the indicators come the recession committee normally suggests we are in a recession at the moment. tom: the basic idea of what is the history of disinflation. it is largely what is called stochastic, it keeps moving lower. that is how you get to the repeated 3% inflation, by some respected houses. jonathan: the outlook might look at one thing other than the fact

of saying that is what it was. that is the tug of war right now. lisa: right now people have a lot of conviction they put against the fed. the employment cost index was telling. the fact that markets moved so much to this idea that the employment cost when i going up as quickly perhaps to the point of the power of jobs. this morning, good to you -- good morning to you. equity futures look like this. we are down to third of 1%. euro-dollar by a quarter of 1%. looking for the fed to go to five today. we are looking -- 25 today. we are looking for the ecb to go 25 tomorrow. tom: the one common feature

here, let's go latin. by definition there after the fact. i think chairman powell, when they made a switch i think they are switching the blanket. he is back. the answer is, if it is a eight minute press conference, it is all going to be the same. we have to wait for the data, including jobs day on friday. can you imagine if jobs day shows disinflation. jonathan: you do what you always do when it is cold. you still the heater. jonathan: he moves it towards them tom: professor fisher talk to me that trip -- a trick.

get the foot out. lisa: a unique view on it. here's what we are looking at. ism manufacturing data comes out the month of january. manufacturing has been bleeding softer for the fifth consecutive read appeared doing start to see an ongoing deepening in the contraction? the job openings is what i am watching. you see a soft landing in the labor market? 2:30 p.m. press conference by jay powell. we will be speaking to some pretty great guests. greg davis of the vanguard. meta-reports earnings. this is going to take on a new important because it builds from snap. the concern about a negative revenue growth we have seen in

snaps history. we seem meta-struggle with some of the same issues. with respect to ad spending versus a credit model that has not really fazed this kind of cyclical downturn for this industry. jonathan: is it a company problem, industry problem, economy problem schumer it is definitely one, probably two and three. tom: the real growth is going to be something that inspectors often through the year. everyone agrees on that. but that is what we talked about the domestic final sales, which takes a lot of the inventory dynamics out. even if it comes down, that gives you a nominal gdp to keep it going. jonathan: joining us now, the managing portfolio strategist or goldman sax -- goldman sachs.

christian: it feels like the data has been supportive and you are making progress. the wage inflation is coming in. i think you are on track for a soft landing. markets are shifting in this direction. it seems to be everything is on track. we expect three or 25 basis points hikes. relatively a relatively balanced meeting. i think the central banks are probably in states of --. tom: we talk to the head of the norwegian southern former yesterday. many of us do not have that problem. do we want to be index based or more choosy skew to a lower more

actively managed? christian: in the last cycle, i think the market cap weights in your favor with the u.s. being the largest marketed and within the u.s., with tech being the largest. what we have been saying for some time, and the next few years, not the same sector leadership, style leadership or regional leadership. that means you have to be more active. lisa: what trade does that challenge really involved in the month of january? christian: it is the big conundrum. everybody starts to believe that soft landing is really happening and china is reopening. the oil price has not moved. it is in my category of good

news becomes bad news. i'll rates have really followed the optimism in the commodity -- all rates have really followed the optimism. good news might become bad news because central banks have to react. at think the reason why it has not reacted as much might be related to the winter because of less gas substitution and because there is still a lot of oil floating around. i think it has been a big lack. lisa: we do lean against this along european trade that has dominated all of january? christian: we prefer non-us versus u.s. markets. there is more runway economically and more slack. you have exposure to china.

generally it feels like a bit of a asymmetry. the challenge you have is the repricing has been incredibly fast. if you look at risk premium, european creditor versus u.s. credit. also the equity risk premium, you have taken out a lot of debt discount in the short time. i think more momentum can be positive and risk premiums. short-term you always want to follow momentum. in a more medium term we are recently constructive. jonathan: how fund do you think the interest rates take rate hikes? -- ecb takes rate hikes?

christian: it is amazing where we have gotten to considering for negative rates. the fact of what we are learning here everywhere in the world is that we are not as addicted to low rates as we thought. it is the certain ability to deal with higher rates. we know in europe the bench has always been a big question because of all of sovereign debt concerns. you are in this positive growth momentum space. depending on inflation normalization, this risks to both sides. jonathan: maybe 125 basis points still to go. to christine's point, i think we are all in agreement. surprised. surprised how well the euro is

earning. tom: ok. jonathan: that is a relative story. tom: give us the italian. i love pushing buttons. jonathan: you want me to talk about italy? the fact that the 10 is about fortunate for -- for 24 and we are not talking about debt crisis is good news. qt on top of that. tom: can we come back and talk about the apple performing stock nobody talks about? it is a secret. lisa: stay tuned. tom: those people get no love and they have done better than apple.

futures are down a quarter of 1%. this is bloomberg. lisa: policymakers at the federal reserve expected to moderate interest rate increases. the fed is wrapping up its two meeting today appeared drone powell is likely to keep further rate hikes on the table. inflation in the euro zone slow down one unexpected in january. last month's reading came in at 8.5%. there will be a more heated debate to come at the european central bank about how interest rates should rise. the u.k. has been hit by its most severe day in more than a -- superior day of stripe in more than a decade. closing schools and crippling the nations rail network. they are demanding they hikes to offset the cost of living.

investors hurt by the malfunction at the u.s. stock exchange are trying to get their money back. claims are likely to exceed the liability pool that covers losses. these stocks selloff triggered by -- fraud allegations has erased more than $93 billion and his value in his company. it cost him his position as asia's richest person. he has been replaced. global news, 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in over 120 countries. i am lisa mateo. this is bloomberg.

>> in order to avoid the hard landing, you need to -- very fast to get back to neutral. that is the story for 2024. it is a soft landing until it becomes a hard landing. that is why the fed needs to be very alert. jonathan: that is why the fed is in such a tricky position. a fantastic conversation. it is a soft landing until it is a hard landing. the risk of doing too little versus the risk of doing too much.

those two risks have come into balance over the last couple of months. tom: absolutely. you follow this more than i do. generalization of hard data versus soft data. there is a wide gap in the information we are getting. jonathan: i think the market is responding to the incoming information. who have a sub 50 pmi. that is what the market is interesting to. this is the difference between federal reserve and markets right now. there are three steps to all of this. in fact, we are going into the second step, pause against inflation disinflation. they just want to stay there. people do not believe they are going to get there and stay there. lisa: people are looking at the

data and the data is coming in soft and showing a very different picture than the hardening. you can pick whatever data point you want and make your own narrative. tom: we get a lot of data today. his jolts more important? -- is jolts more important? jonathan: let's make it simple if you can. do you believe the inflation problem is on the demand side or the supply side? if you believe they are demand-side or driven, the labor market should make you nervous. the labor market will make them nervous. we will tell them that this job is not done, which is why we keep hearing the phrase, the job is not done. i imagine we will hear it later. lisa: the jolts will not sway

them either way. jonathan: job openings down and unemployment does not have to come up too much. perfect, wages soften. it is that time of year. tom: joining now in washington, our bloomberg washington correspondent. we talk in the previous hour about this important meeting about the speaker of the house and mr. biden as well. i want to digress. we will talk about t-mobile in a minute. on the regulatory tone in washington, the miracle of t-mobile, which we will get to, is they really just ignored all of the regulation garbage in washington and delivered a superior product. do you get the tone for this

year that the biden administration is racing towards more regulation, more of a blanketing of what the industry can do? annmarie: today he will be meeting with his competition counsel. one part of that besides this credit card fee issue they plan to announce, they want to decrease the fee from $30 to eight dollars. they think it will save consumers billions of dollars. they are also looking at the application market. when you go into the android app , ethic it is called google something -- i think it is called google something. they think it is not enough competition. this is not something new. it just and i get to a senate floor for a vote. today, it is about shedding light and asking congress to act on it. tom: for those of us who are

fossils and remembering the day that the government went away from suing microsoft. do the republicans have a stark difference from democrats or are they on the same page with going after big tech? annmarie: it is fair to say that there is moments and the levels of bipartisanship when it comes to concerns each party has when it comes to big tech. sometimes those concerns do not match up. especially when you look at the likes of the social media companies, when it comes to matin or twitter. there are big concerns but they differ weird lisa: we seem the biden administration -- differ in both sides. we see the biden administration. on the other hand, there was a story about the biden administration providing support for the drilling project in alaska, which goes against also

some of the left side of the party, particularly the greenside. how much pushback is he getting inside the democratic party? . annmarie: there are certainly not happy about this announcement. they have had to pivot when it comes to energy policy. this was a president, who remembered called saudi arabia a pariah then had to make a trip there when gas prices were flirting with five dollars a gallon. this is the recognition of the administration, while they have a aimed to want to electrify the grid and changed in the energy landscape, it is in a transition . maybe it is not as far ahead of a transition as many in the left wing hoped it would be. they really have no choice. there are sanctions against russia. there are a number of issues at play in terms of the energy

landscape. when deals, when some of them give their ok, even if it means a progressive way of the party. midterm elections are over. he has done a lot for the aggressive wing. this is -- progressive wing. jonathan: great to catch up. we are taking the show to miami. a net domestic migration. year over year change. new york, -0.9. where are they going? 1.9% texas. real numbers there. tom: why do we think it is a one-off? i am hearing conversation to conversation, anecdote to anecdote. jonathan: i was always told it was the weather. i realized it is more than just

the weather. tom: our humility is in line here. this is a really important thing. a study when you failed. it is not my biggest failure. the bottom line, my second biggest failure was the guy with the big t-shirt. -- pink t-shirt. t-mobile out with earnings today is outperforming apple computer fractionally. there up tony for printer percent per year -- 24% per year. it is an act of god. they have flattened the competition, including verizon, which is flat free cash flow from 2019. jonathan: because he wore a magenta t-shirt? tom: i told him that. i just had to let him know other than -- the single guy i must

been wrong on, this is an under told story. i have several phone lines with t-mobile. as you study your mistakes, this is my biggest market mistake in 10 years was not climbing on t-mobile. jonathan: you know there's talk about him being the one to maybe run twitter. this is not a exclusive report. lisa: do you think elon musk? those egos together would actually do ok? jonathan: you know when people say this is who should run it question mark lisa: should and will. probably big difference as we know it.

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>> live from a snowy new york city. mike mckee informs me that central park hasn't -- has recorded the first snowfall of the season. lisa: so late. it should have come earlier. jonathan: have you seen the tempter for this -- >> -- temperature for this weekend? tom: it is zero and it was going to be three and it is going to be 12 but this is back to ace --

1869 and i am not smart enough to know if it is global morning but there is change behavior with new york without the slush. lisa: it is less difficult to get up in the morning when it is not freezing. it makes january go faster. jonathan: that is your theory on why january went so quick. lisa: that is correct. jonathan: things with van -- fast for the bulls because they went so good. the nasdaq 100 up 12.6% and the s&p was up 6% last month and the euro stocks up 50. that was vaccine time back in november 2020. tom: what is important and this is off a statement that october was low, the bloomberg total

return bond index is up 7.8%. 32% annualized and defeats the idea that you cannot make money in bonds. . jonathan: going into the federal reserve this afternoon, the two year is close to 420. the fed is pushing towards 5%. maybe in the meeting after this one but the two-year is at 420 and the 10 is at 350 -- 3.50. lisa: when will the market wrecked into what the market saying or the other way around? the moves are telling of the divergent fates of -- when we talk about the chip makers, amd had better results.

western digital, down 4% and to give you a sense that you can get the winners and losers, a difficult time to come up with generality for the market action. snap, those shares lower by 50% after they forecasted the first drop in revenue in their public existence. what this means for meta, they are selling and shares lower by 1% but many have gained so much this year. match, to give you a sense of companies that have grown up over the past 10 years, this is the dating app that doesn't see any material improvement in its business model and those shares down more than 8%. how many other companies that are like that that existed because of a very benign environment and monetary

situation that are now going to have to reckon with a different reality? jonathan: and meda as well --m eta as well. two names that have commoditized people. [laughter] katie: should --tom: peloton, no longer at "break up extinction -- break --brink of extinction." jonathan: is that better than expected? tom: i have no clue. mark berman -- this is important to get to the fed meeting and robert chip -- and robert tipp joins us. jon ferro and the dated -- two

year yield. where should the two year yield the now or where -- be now or where is it heading to off of that action, 4.19%? robert: i think the two-year yield be headed higher and the fed has been steady on their anti-inflation message. we could get upward pressure on yields in the near term and the markets are screaming and the fed's indicators recession, which would be the first 18 months of the yield curve are inverted and screaming for them to stop. and 2018, they did one more hike than they needed to and they will probably do two more hikes than they need to this time and everything is coming together for a weird bull market but as you highlighted, the returns are coming in.

they have a long way to go. lisa: why is the bond market right in the federal -- and the fed wrong? robert: the bond market has fear and greed operating and what we saw in 20 after the yield your -- yield lows in 2021, was -- they saw the growth screaming back in the markets went to an extreme all around the world. even japan, to get ahead of the central bank rate hikes and the aggressive fight on inflation and they are ahead of the curve. everything that was supposed to have it is happening in spades and the growth is moderating around the world but in the u.s. as well and it is a very solid backdrop. you will have rolling on recessions where people are surprised that you don't have serious downside problems but it

is moderating and the inflation numbers are coming down in spades. they had another negative print in europe. your core -- in the u.s., the real center of the inflation, the sticky part you will be worried about has been negative for three months and commodity prices are down and everything is coming together. the market short-term could be jarred by the fact that the fed is on the role. lisa: let's talk about the concern that let's say they do pause. the fed gets what they want and they stop in mark and inflation doesn't go down much further. it stops at 3.5% but doesn't continue to disinflation. --disinflate. what does the fed do? robert: they will hold. headline inflation will come down more rapidly because

commodity prices come down rapidly in good prices have elevated -- and goods prices have elevated. your below target inflation bet he had, that was a one time fluke and a lot of competition coming on the heels of the financial crisis. the markets may be wrong about that and this market is not going to be big profits coming from yields. this will be bull market standing -- stemming from yields being high. tom: is their follow-through here? it has been a lovely january and a nice fixed income bounce. do we break up to eight new regime or do we turn --churn? robert: when you look across fixed income sectors, your yields are back up to 2002 levels.

the clock has been turned back to the beginning of the last days in the prior bull market. you are going to have solar returns from fixed income over the next 10 years and what profile that will take over time, the yields go up a little bit now as the fed finishes the rate hike cycle and i think there will be give back. the big picture, it will be slow and steady. tom: robert, what is important here is if i have a success and i finally got the bounce after a perfect 2022 -- horrific 2020 do i adjust to a shorter duration or different credit type or do i adjust to cash? robert: be danger for a lot of investors will be that -- you stock up. -- choke up. five or 10 years from now,

growth in aggregate will be slower than it is now and you won't have the post-covid stimulus and enthusiasm and inflation will be lower. the people in cash or bills, they will not have locked in those long-term returns and on the off chance inflation drops below target quickly and central banks cut along the lines more rapidly than what is priced into the curve, investors that have not been in long-term fixed income will mix out -- this out. 4%, depending on where they are or 9% if they are in high-yield, but will be -- if in the front end, they will get 4% and the short rates will come down and if they are locking on the high end or long general fixed income

or 10 year fixed income, that will be with them. jonathan: how would you respond if the fed went 50 today? robert: i think economies have a lot more underlying growth -- or a lot more resilience to central thank -- bank mistakes and 50 would be a mistake. if i were in their shoes, i would say we will hike three times this year 25 basis points. we are skipping today and we have seen the cpi and all these things and it does not mean we will not hike more but we are not-today stop we are skipping today -- we are not hiking today. we are skipping today. given what we have seen on the inflation side, the data has been revised under their feet. it would be understandable in

some sense and it will be a recoverable error. jonathan: thank you. diplomatic. tom: what is it about today? jonathan: i will be pricing in cuts tomorrow. tom: a recoverable error sounds like the red sox strategy. jonathan: a diplomatic tone. lisa: little barbs put in there. tom: excuse me, mr. chairman, is today's signal a recoverable error? jonathan: -- lisa: the takeaway is the market is right and the fed is wrong. jonathan: it wouldn't be the first time the market has been wrong. lisa: that is the concern. jonathan: yield is down. the fed decision coming up. adp jobs in 30 minutes time and

we will break that down with mark vicki -- mike mckee. ed: i am lisa matteo --lisa: i am lisa matteo. they are expected to raise interest rates by 25 basis points at the end of their today meeting today. jerome powell is likely to keep rate hikes on the table while leaning against bets that the fed will cut later this year. nikki haley plans to announce she is running for president. she would become the first republican to officially challenge her boss for the nomination. she was ambassador to the united nations under donald trump and the former president raised less than $10 million after he announced he is running. that is seen this -- as disappointing. the coo going it -- coo -- ceo

of boeing says it is a matter -- being developed for the military will eventually come to commercial jets. >> you will have -- we have an application for an autonomous airplane and that application is in and the faa will work with us today on building a certification program for autonomy and -- lisa: he spoke at the event and making the final delivery of up 740 -- eight 747 -- a 747. 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 matteo. this is bloomberg.

thanks to avalara, we can calculate sales tax automatically. avalarahhhhhh what if tax rates change? ahhhhhh filing sales tax returns? ahhhhhh business license guidance? ahhhhhh -cross-border sales? -ahhhhhh -item classification? -ahhhhhh does it connect with acc...? ahhhhhh ahhhhhh ahhhhhh >> our view coming into this quarter was not necessarily the result would be great but expectations were so low that it

put risk reward on the upside. and that combination does not take a lot to get the stocks moving higher. jonathan: that was josie -- joey kaiser of city --citi. coming up later on, a federal reserve decision this afternoon and in 20 minutes, you will get the adb -- adp report. it is a busy morning and after that, you get meta-earnings. tom: i think we have to say this is an odd meeting and there is a lot of data coming out today and i will go to the federal indications -- federal indications -- pharaoh indicators. jonathan: we had a string of

them and you should be paying a lot of attention so it is weird, historically, to have set up 50 ism's in federal reserve that is high kick. lisa: we have a manufacturing recession but a services expansion so how do we describe weird and terms of economic policy when you have this rolling economic cycle that is hard to nail down. jonathan: exxon is down a quarter of 1% for the earnings the expectations with a record 59 billion dollar profit in the last 24 hours. the white house says it is outrageous -- the white house says -- i think that response is predictable after we heard chevron. tom: there is a different tone

in europe and i am fascinated by big distinction in europe where they're all windfall profit issues and here, it is a huge debate. jonathan: they can make their decisions and they have done that. there are other industries that we should talk about windfall taxes. if the prophets of exxon and chevron are the pot -- consequences of policy and war and not innovation, barring words from thatcher -- borrowing words from thatcher, there is a case there should be windfall taxes. could you make the same minutes for pfizer and with donor where we had mandates? are those profits a consequence of policy? lisa: it is a great point and it to the politicalization in the energy industry. jonathan: i know there is the innovation argument but when it comes to buybacks, we are talking about chevron but not

apple. when we talk about apple markets, they are jews -- huge. ed: --lisa: a lot of the energy companies are saying that they have to do -- reduce emissions and the questions are how you get there. romaine: i am --jonathan: i am far more cynical. you don't really look at it. oil at the gas pump, that will make a difference. that is what it is about. tom: we will get philosophical here and look at the broader oil policy. regina mayor joins us now. regina, i will cut to the chase. are we prepared for a $100 a barrel oil?

regina: we have been there. i think we are prepared for it. we have needed demand but we are expecting demand will grow at the highest level. and while supply is comfortably within the five-year rolling average, what will happen when russia's supplies come off the market and what happens when chinese demand spikes. when you talk about what is relative to the traditional energy companies, their response to capital investment will be more muted because of the politicalization you mentioned so we will not have massive increases in supply and we are facing -- carbon demand worldwide. tom: what do we do now downstream? there is so much romance in the upstream debate and less in downstream. what about not in my backyard

and what are companies doing to fight that? regina: there is not in my backyard for wind farms and solar farms and all kinds of investments. natural gas expiration and development and i was in devil --davos. clean energy for the first time in 2022, dollar for dollar matching fossil fuel energy but that will not be enough to achieve the energy transition. it needs to get to 4-1. we still need hydrocarbon investments and massive investments in clean energy and new technologies. showing. --shoring. the components for the electrolyzers -- they come from china. how do we create new supply

chains to deliver energy we need to friendly part of the world with a diversification strategy? it is not just about oil. the weapon -- the weaponization of new components -- not just oil will become a big part of the policy that nations will address. lisa: but the question of diesel in europe, there have been stockpiles of deals ahead of a new sanction on diesel, of refined russian oil. at what point does that become a concern because there has not been enough friend shoring when it comes to diesel imports. regina: those are some of the vulnerabilities the war of ukraine has exposed to global supply change -- change. --chains. that is an economic success story that we don't often talk about and the european national -- natural gas prices in

september last year were 350 -- it is down to 60 and a significant drop. henry hub is below three. i am expecting that they european unit will have it as successfully as they did for natural gas with diesel and it will be part of their overall strategy as they weaned themselves off fossil fuels. jonathan: regina mayor of kpmg. it has almost been a year since the war started. lisa: it is horrific. there is no sense of it end ing --ending. a formal general says the u.s. is escalating this thanks to the web ring -- to the weaponry they are sending over because they are calling president putin's

bluff. jonathan: what happened to the conversation about only sending defensive equipment? lisa: it went away and it is quite interesting, the question of escalation, is it more of -- on the forefront because they are saying, fighter jets is an escalating -- escalation but think -- other things not so much. jonathan: the work continues and that the winter that many europeans feared. tom: you're looking at a gallon of gas in be your -- in the united states but starting in february, a year ago and the war , a huge spike up. it spiked to 420 and when hired to $5.02 and we came right down to where we were at the beginning of the war. regina is a cornell grad and in the 70's, where you thought

about driving across town because it was a shock what i gallon of gas is and i am fascinated if we go back to four dollars a gallon or five dollars a gallon, do we get the same behavior? lisa: we did see that and i think that was a take away from what we saw last year. there was demand destruction and there was the esp are released and you saw the man go down in is that going to create some sort of ceiling to how high prices could go? tom: we went --jonathan: we went from one -- $1.30 in brent. tom: i did not know that. jonathan: somewhere in the high 70's this morning and there are some club -- there are some calls were triple digit crude. things change. liz young will join us shortly

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>> the road is in a much better place to be then where it was five months ago. >> is a mixed picture and the

inflation picture is clear. >> that china reopening story is the big narrative going on. >> expectations were so low that it put risk reward on the upside. >> it is that we don't get a recession in 2023 and the wage growth stays high. >> this is bloomberg surveillance with tom keene, jonathan ferro, and lisa abramovitz. tom: good morning everyone. a 14 hour day and we greet you this morning on radio and television and move on to the fed decision this afternoon with my petite -- with mike mckee's leadership. jonathan: financial conditions, easy and front and center is the headline. january, they -- we will find out. tom: we talked to dominique cost a mere --constamere.

jonathan: it is early tutee up reports and maybe people think -- many people think the reports are around the corner. if you really want to get into the weeds, that is where the focus for the mike mckees of this world will be. does that statement change? tom: in the idea of cumulative, that is the same idea. jonathan: i think there was an argument that vice chair braden maybe in that statement. where is the damage right now? it is not in the labor market. tom: i am going to go, as simple as i can. one person is pounding the table that she is filing housing dynamics, what is the chairman say about the impact of housing? you call that service sector or some phrase for the new --lisa:

you mean the rolling recession and the question of -- tom: or service. -- core service. lisa: super court. --core. there is an issue on what people are focused on and what the fed wants to do and i like how you were talking about bateman speech. the way he can win is getting a short speech and saying nothing because there is nothing he could say that is going to get the market to comply with them and he will not do anything good if he signals upon sort easing. -- some sort of pause or easing. tom: the data dump is extraordinary. lisa: why should he say anything? jonathan: tough to do it at a news conference. he is not very good at doing that. lisa: what do you think will be the main question that he will get that will potentially trigger a reaction?

i am thinking it is about how concerned he is about the easing in financial conditions. jonathan: number one, couldn't agree more and that is the question and the spread between been -- them and the market on the back of that. they can't resolve that today with a 25 basis point hike downshifting. lisa: they could say we are bothered by the rally and we don't like what the market has done and this goes against what we are trying to accomplish. that kumutha markets. --that could move the markets. tom: i disagree. i think they look at the markets as a some subtle which shows within the bloomberg financial index, shocking with accommodation. jonathan: you post a question like this and a journalist will do it. happy see -- have we seen a -- he knows the question is coming. how he answers it, you can read

a lot into it. he woke with this morning and looked in the matter -- he woke up this morning and looked in the mirror and practice it. tom: there is a huge body of america, they are looking at people or -- in bowties navelgazing recession and saying, we -- are you kidding me? lisa: perhaps people are listening to that in the general headlines but the markets don't care about that. they are looking to see how much he is bothered. tom: we need a data check and i will start with the combination of standard deviation, positive points 3.26. jonathan: the stocks are low in on the year on year today in the month of january, flying up. on the nasdaq, up 10 and in

europe. a massive run and we have to talk about china and i would love to hear about china in the news conference. maybe the chair thinks maybe. i would be interested to see how he frames it because you cannot make a call of -- on economic data without a decent idea -- tom: i will say off the new blanchard effort, there are other factors like demographics and technology and how the -- how blind does defend find it. jonathan: do we get the dark room analogy? tom: probably. let's get some clarity. liz jones joins us. she is on fire. she is the head of strategy at sofi.

you say the best part at the bottom of your research note, if it looks like a duck and >> like a duck, you say, it is not flamingo or ostrich. it is a duck and we will slow down. what is the evidence you see that it is a duck? liz: good morning. when you -- you talked about it earlier in the hour. what are the indicators that are telling us things are getting worse. if you look at leading indicators to give us a signal things are getting worse and not better, most of the leading indicators, if not all, are telling us that things are getting worse so if you look at things like the leading economic index and the change over a six-month period, that six month changes -8.2%. that level has never gotten below -3% without a recession to follow. look at the yield curve and

versions, not just the twos, we are looking at the three month inversion. all converted. -- inverted and deeply for a long period of time so these are no longer questionable and things like capacity utilization moving down for three months in a row. that usually precedes a recession. i recognize that some things contradict that and there are reasons for people to stay bullish and they are excited about the rally. tom: i see the theory and it is a tight linkage. it is known as the premo --bramo -young. . how do people adapt to the theory today? liz: here is the thing. jerome powell has not really changed his tune at all but the

market, every single time we lead up to one of these press conferences, challenges him and says we are listening but not entirely listening so prove to us that we should listen to what you are saying. the hiking cycle is maturing and there is no question about that. they're closer to the end of it been to the beginning that is the thing about the rate hike cycle. it usually indicates that we are late cycle in the business cycle. when we get towards the end of the rate hike cycle, that usually means we are at the beginning of the economic cycle turning down. this doesn't always happen at the same time. it happens in sequence and rate hikes take a while to bake into the economic data. the effort headlines in certain sectors and i think there is a recession in certain sectors of the economy. it is not something we can deny and say everything is fine. the labor market is strong.

that is true but only in the data we know of and that data is lagging by about six months when you look at some of the downturns starting to happen last summer. lisa: putting the bond market aside because perhaps the bond market is pricing in the slow down, isn't the stock market disagreeing based on january's action? liz: absolutely. this is what gets confusing for investors. you look at the conflicting data but say -- and say one of them will be wrong but one of them would be right. the stock market traded on number -- different things. some work technical and some were opposite of what happened last year and we forgot that december was quite painful in the nasdaq and the s&p. as we got excited about a 6% rally of the s&p in january, it was down 6% in december and the nasdaq was down 9% so it was not

as if that we got this new outflow -- alpha generation. there were other things that came into play, inflation is moving in the right direction. goods inflation probably moves to all-out deflation that is a good thing for consumers and that is affecting for input costs. the concern is at what point does the inflation drop get stuck? fully get stuck at a level that is hard than what the fed is comfortable with and is it stuck at a level that keeps the fed hawkish. how long can businesses and economies sustain? jonathan: it is the what if we end up at foreign? liz young bear of sofi -- there of sofi. adp report is five minutes away. the previous number, 235 and that is the appetizer for the

payroll friday. 190,000 is the median estimate. tom: 190 is the estimate? people, i believe it is jp morgan and i can stand corrected, they say we need to go under 100,000 to show -- we are miles from that. kailey: that is --lisa: several banks say that. jonathan: one estimate says 305,000. they think we get a bounce back in the january labor market data. that is everyone. the italian banks are looking for 130. 130 to 305. from new york, this is bloomberg. [speaking foreign language] -- ♪ lisa: give you up-to-date --

keeping you up-to-date. policymakers from the federal reserve are expected -- jerome powell likely to keep further rate hikes on the table while leaning against bets the central bank will cut later this year. president biden -- president and kevin mccarthy me today put the debt limit in the balance. house republicans are demanding spending cuts and the president said he is open to physical we -- reform but won't negotiate on the borrowing cap. inflation in the eurozone slow down. -- slowed down. that's just that there will be a more heated debate -- should rise. the u.k. has been hit by its most severe day with strikes in more than a decade. as many as 475,000 move -- union

members are on strike and closing schools and credit -- closing the rail network. j.p. morgan chase is planning to open a digital bank in germany that will create the launchpad for the largest u.s. bank to expand in europe. bloomberg has learned the german bank will open late next year are 2025. they plan to target other companies -- countries after that. 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 matteo and this is bloomberg. ♪ 92% still active? seems high. seriously? it's just a bike. wait. they make a treadmill with an intuitive speed knob? yeah. want to try? 92% stick with it, so can you. rent a peloton bike or bike+. terms apply. the first time your sales reached 100k

was also the first time you hit this note... ( screams in joy) save 20% with the lowest transaction fees and keep more of what you make. with a partner that always puts you first. godaddy. tools and support for every small business first.

>> jay powell hate surprises and likes to stay on script. the surprise part, not possible

and everyone said 25 basis points so there will be no shock. i think we will have to put up hawkish home -- tone. nobody plans to pause. romaine: chairman --jonathan: chairman powell around the corner. equities features down 2/10 of 1%. we would joint mike mckee in d.c.. -- we will joint mike mckee in d.c. -- join mike mckee in d.c. mike: the adp report does not have a great check wrote -- doesn't have a great check -- track record. it is significantly lower than the 180,000 that have been forecast for the indicator. adp blames the weather. the blizzards in the midwest -- during the month of january and

the floods in california kept people off the job and adp looks at the whole month of employment whereas labor department looks at the paper period containing 12 for the month so adp should not have as much of a weather impact asked the bls does so it does raise questions on what we will see on friday. the official consensus forecast for bloomberg is 190,000 jobs for the bls report on friday. goods producing jobs with big losers in that fits with a story about the weather, with 24,000 construction jobs going away. manufacturing increased by 23,000 according to adp and the only area of the country that lost jobs, the midwest, 40,000 jobs fewer and that could be the weather. if the adp is to be believed, january my have been a softer hiring month but because they're talking about weather, it may not b's -- and may not be

something that fits the pattern. jonathan: thank you. you have breaking news yourself? lisa: tom brady announced he is retiring. he did before but he is not being pressured by anybody in the household. i won't get into any of that. jonathan: you jested. lisa: we will move on. let's talk about adp. that is what i was saying. tom: can i just ate here -- state here -- [laughter] tom: i am looking at the wonderful video of tom brady in a t-shirt and mike mckee is into the nfl. mike mckee, he looks exactly like the kid on -- out of michigan no one believed a million years ago. mike: he has worked hard to stay in shape which is why he can

keep playing at 45 years old. he looks a lot better than uri. not as good as bramo or john. there is a lot of speculation he would keep playing. tom: you will get the video -- we will get the video. lisa: the fact we are talking about tom brady instead of adp is telling. it shows a lack of importance a lot of people put on adp even though we are talking about job stated that's coming out. it is important coming out on friday. jonathan: we are giving the adp report the respect it deserves. lisa: that is harsh. jonathan: it is amazing everyone looks at the report and say i don't care about that. tom: i will defend adp. they are figuring it out. they're going back to their countable paycheck ability and automatic data processing. they are looking at the data. what does the data say?

mike: the data says that we are seeing a slowdown in hiring and it -- you were talking, it is down at the 100,000 level and that is the replacement level, the level of jobs you need each month. if this is just weather, one would expect a snap back in february and it is hard to define whether it is telling us anything about the future of the economy. they do say they are focusing on how many jobs were created and not massage the numbers. they also do payroll and job, the people who stay on the job saw their pay increase 7.3% during the month. that doesn't show the progress the fed would be looking for. lisa: there is indication from this data, in terms of the services' bifurcation on the infection side and you have seen the divergence continue. has there been any precedents for this without the rest of the

economy falling on and i said that ahead of the ism. mike: if you go back to 2016, there was a manufacturing recession in the u.s. particularly in the oil patch and it did not translate to the rest of the economy but we saw slowdown at that time. it has happened before and it is interesting that so far, the fed has raised interest rates were 50 basements -- basis points and unemployment has gone down. jonathan: tom brady quits later and i love that data point. when we get the jobs report, it is the quits rate. if you feel, confident about the economy, you quit your job because you feel you can get another one. mike: it was a holiday month and we talk about december, you talking about. it's where people -- you're

talking about. -- the other thing you want to see is the job openings number because jay powell is -- the strategy on that and the idea that there are so many open jobs that we don't have to have a big rise in unemployment to bring down inflation. people can get the open jobs. jonathan: mike mckee, wonderful as always. kriti: nice --tom: nice brady analysis. jonathan: the previous number, a revised 253. tom: with his procedure, i believe he darkened the door at manchester united and there was a huge uproar physically after his bitcoin debacle. this is a guide that needs to attach himself to the tots. him and harry king bonding and loving cases and taking equity interest. jonathan: what would you like to

see him do for first --spurs? tom: i remember clearly, who is this guy? no one cared about this guy from michigan. the pantheon of this and the process is the -- and the persistency of his -- jonathan: you think he is retiring? tom: yes. lisa: i love your hands, it is the quits rate. i look at indeed.com for the highest paying sports jobs. he beat -- he could become a sports editor. jonathan: to be a baseball coach, you only get that much? tom: it is little league. lisa: i am guessing this is not a yankees sports reporter. $30,000 a year -- $40,000 year.

jonathan: hasn't he got a tv gig lined up at foxx? lisa: i am sure. jonathan: tom, have you seen that contract? we are talking about real money. tom: harry king worships tom brady. jonathan: he is a big fan. tom: you bring baby -- brady odor --over -- brady could add an luster. you get the whole group there to read not -- reignite, are they fifth-place? jonathan: the control room says we are losing audience by the second. tom: it is a lovely video. jonathan: coming up, bob michele of jp morgan and kathy jones. mike wilson of morgan stanley and other people from wells fargo -- and chris harvey of

wells fargo. tom: we may give a question on weight -- tom brady. for america, it is a big deal. jonathan: this may not be a big deal for you -- tom: this may not be a big deal for you. jonathan: when mike mckee broke the number, and came back, i went straight to brady. tom: you did. jonathan: do you understand -- i understood the magnitude of the moment. lisa: you're going to leave now? jonathan: i don't believe he retired. lisa: i think you are right. i think he retired. jonathan: all right. [laughter] ♪

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tom: bloomberg surveillance on thursday and please join us this afternoon and we leave with the former vice chairman. diane swonk, we are thrilled will be with us today. right now, we will go with futures -11 and are well off off the shock adp data. to michael mckee on the dexterity of his data world and the death -- the debt ceiling. what is odd at 8:30 wall street

time? mike: we have the latest refunding decision from the u.s. treasury department and the extraordinary measures that treasury is taking to stay under the debt ceiling are enabling them to sell as much in terms of refunding fonts -- bonds this quarter as they did the prior quarter and the option sizes have changed. they will sell $96 billion of securities next week. 28.9 billion in two cash, the only way they can do that is because they are taking the measures to stay under the debt ceiling. they say it is unlikely that the debt limit will be reached before early june but expect variability in bill and cash management. treasury going to say as we get closer to the debt ceiling, we will sell very short-term

securities so they don't run into a debt ceiling problem. tom: what is the so what in terms of who buys the debt? is it the u.s. institutions or american public or foreign institutions? mike: it is a mixture of all of those and we have seen the central banks go and down and we have also seen the primary deals go up and down in terms of who is buying what. no indication that either the debt ceiling or any of the political problems that we have had in the u.s. are causing people to rethink. we are watching countries like china to see if they might cut back on their purchases of u.s. treasuries and there will be a question when japan gets to the stage of deciding what to do about the yield curve curve -- control, if yields go up in japan, you will see treasury -- fewer treasury purchases from

the japanese because they will switch to their own country. in terms of the news of the day and jobs, tom brady is going to fox to be their lead analyst for $375 million over 10 years so he is not a retiree. he is a jobs which are. i wonder if that is going to affect the job salary sizes because he is switching over. lisa: fantastic analysis. michael mckee talking about the denomination of what we have seen with respect to john -- tom brady. i want to get a sense because tom asked this question, why do we care about this granular inside baseball type of machinations? there is a question about whether the debt ceiling and the debate will roof -- affect the role off of the bones sheet and their ability to sell off their debt. what is the latest? mike: the fed has not commented

but jay powell will be asked about it. if the debt ceiling is binding and we get to a situation where there is not enough issuance out there in the fed could speed up sales from its balance sheet to provide more liquidity to the bond market or they could start. buying bonds. . they have said they don't want to do that or get in the middle between the fight between the administration and congress but if the market seized up, they are obligated to do something. tom: thank you so much and we look forward to your questions this afternoon on the career and life of tom brady. joining us jerome schneider. -- i will not ask you about tom brady but i will ask you what we have observed through the morning. what did january bounce? you could take 6% and i know you are sitting with your bloomberg and your trader and utilizing

that out as well. what is the now wet for you after january pop -- now what for you after a january pop? jerome: you're right, the annualized return you have in a single month add up to something for a cash and something in the realm of 6% and that is important to consider when you look at the landscape that is punctuated with economic uncertainty and potential for volatility and we are at a car -- a crossroads where the market is at an impasse with the federal reserve. that will probably be reconciled over the next couple weeks and months and it doesn't necessarily petraeus move right -- smooth ride. we find value within the front end of the yield space within the global bond world but the question is not necessarily where to be on the yield curve but more poorly, it is a discussion on how much to allocate with fixed income. tom: what is so important is

obe, where you are overcome -- by advance. people in the mid maturity decide they want to enter the jerome schneider space and you get price up, you'll down where it is no fun for you. will you be overwhelmed by people's running -- he -- and dashing -- jerome: you have people looking -- moving from lower yield investments now that they are aware of lower -- attractive in cash. it is more in buying sure data -- shorts data. things that have self liquidating features but remain insulated to where we are in the global economic cycle. there is a focus right now where people have shunned an over

allocation of bonds and that catches the point of and set up a discussion on where in the yield curve to become a despite the discussions with the fed, it is more about how you want to create a balance portfolio. lisa: this shift in tone that you have right now is telling because you are one of the most popular people in the investment world. it was all about the appeal of cash as an income producing instrument and now is fixed income is an appealing tone and two other assets. does that indicate people are moving out of cash at a rapid pace and going into denominations of credit or other equities? jerome: not necessarily an what is prevalent in peoples's mind is getting stung by the third rail of volatility within the broader like to place. people don't dismiss what happened in 2020 quickly and when they see. -- when they see periods of risk

off -- during those are certain and while people might seem all -- opportunistic or see a softer landing sink -- landing given what we have seen, you are not seeing the risk appetite being as pervasive specifically because that inciting action was driven by low yields and that is a factor that has recalibrated people are stressed expectations to create a more balanced approach to how they handle risk and focusing on the volatility -- lisa: if lows continue, if you have dessert -- if you have observed at the same clip they did a month or two months ago? jerome: we are seeing a pause and people are accepting the fact that these higher yields are here to stay. they are taking the initial step

into money market funds and t-bill supplies have come. we are seeing people utilize this as a strategic approach. front data fixed income and low duration strategies. those are giving people an opportune set to create the bounce and what is important is a natural tension within the market, attention which is -- a tension with -- the market is fixed. that is a probability based event. there is an uncertain action that says that there is a certain probability assigned to it. it doesn't mean with 100% certainty that there are cuts but there is a probability. the federal reserve is operating for the next chapter of the playbook and they are in mind that there is lasting damage from inflation and what that means for the investor that there is going to be some reconciliation and that isn't as

painless at people will portray even if we get the soft landing. tom: email -- one person emailed do you care about the debt ceiling? jerome: we care but it is too early. it is a prelude to the new act and we are not forecasting a default situation or that -- but that is something we have to be prepared for. this is not a discussion until well into the summer and we have a playbook on how it happens. we see, we focus not on the fed today but over the next six weeks where we will get more important messaging. the march towards march is where we will see a more definitive posturing in terms of broader market impacts. the debt ceiling is not something du jour that we have

to worry about. perhaps being trumped by the tom brady news. lisa: any other comments on bonds? tom: i think this is important. we are seeing the bond market reaction, 4.91%. 10-year comes in with up vengeance. we are noting substantial inversion over the last two days and rounded down, -73 basis points with a real yield coming in and on one outcome, no one is expecting to point -- 3.99%, two year yield. no one is looking for price up, you'll down. --yield down. lisa: what i am struggling with here and something we have heard from guests is the distance between the bond market that is pricing in that softening and expecting the fed one have to do

that much. the stock market is not on the same page. you could say we are bouncing back after the selloffs of last year but at what point does that divergence starts to create more discomfort? tom: you brought this up, this from bloomberg and bloomberg reporting that blackstone's real estate trust that lisa was on has hit their monthly reduction limit in january. lisa: what has been price in given that it is not a global market? tom: professor abby joseph cohen of columbia business school. the morning. this is bloomberg surveillance this morning and this afternoon --. lisa: i am lisa matteo. federal reserve policymakers

went to him on the message that their work fighting inflation is not done and they are expected to raise interest rates by 24 basis points. the rome power is likely to keep for the rate hikes on the table while leaning against that's the fed will cut later this year. nikki haley plans to announce she is running for president. she would become the first republican to officially challenge her boss for the nomination. she was ambassador to the united nations under donald trump and the former president raised less than $10 million after he announced he is running and that is seen as a disappointing call. --hall --haul. the consumer financial protection bureau will formally propose a role to cap late payment credit card fees at eight dollars, an average of $30. the biden administration wants congress to open up mobile app app stores to greater

competition. thieves stole a record 3.8 billion dollars worth of cryptocurrency in 20 according to a research firm. it's report says that hackers linked to north korea still at an estimated 1.7 billion dollars last year and more than four times as much in 2021. tom brady says he is retiring from the nfl and this time for good. in 21 seasons, he won seven super bowl championships and he announced his retirement last year but a few weeks later, he returned. 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 matteo and this is bloomberg. ♪

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fed and the only way that happens if we get payrolls coming down well below 200 and looking like they are going to 100,000. tom: the nuances -- dr. carpenter, the chief global economist at global -- morgan stanley. what will be fascinating is what jay powell reit's officers where -- reads off script. dizzy look at the script every tent he is not reading it? it is hilarious and lagarde does the same thing. the question, let me answer that as best i can. lisa: we have decided as a group -- i want to hear what he says about financial conditions and how much he pushes back and whether they are ok with it because the economic data is softening enough to get them comfort. tom: the great fears of

academics on the island of manhattan has been to audit and professor told -- professor colin at columbia business school joining us now. are you enjoying it? is it a whole new life for you where you will be very -- be there until you are an emeritus? abby: i am having a great time at columbia and the students are from wonderful. half of them are outside the united states -- from outside the united states and they are all prepared and most of them have worked become -- before they have come to visit school. they are really committed. tom: let's talk about a paper you did and i don't know if you drag it out for his students and punish them. we brought great philosophy into columbia business school and

what aristotle suggested -- get off the wagon of believing every data point. what is suspect right now and what is the humility we have to bring in scanning every tea leaf. abby: fabulous question and a timely one. there's focus on u.s. data among u.s. investors and we have to recognize the fed is looking and internationally -- looking internationally and they are looking at trends in regards to economic growth and inflation and there are concerns about what happens to the data in china. people don't trust those data and when we turn our attention back to the u.s., it is our employment data. today alone, we will be getting the jolts data. that is an important element of what we look at and the employment cost index information which is critical. when -- but i worry most about

in terms of too much instead announces, it would be the company reports. we are in the middle of earnings report season and what we know from history is that in periods when the markets have been down, companies will take at the -- a look at the fourth quarter results and say, let's take reserves and throw in the kitchen sink. it clears the slate and gives them a lower base to which to work. i wouldn't read too much in the fourth quarter results, particularly when they seem to be throwing in all kinds of disappointments that they knew about for a long time. i am much more focused on economic activity going forward. lisa: have we priced out the -- free money? abby: to a large extent. we saw that in 2020 we saw pes

in general going down when the segments of the market in and out of the yuan -- united states , where we saw fast-growing areas depended on low interest rates. nobody saw it in technology stocks but we also saw it in emerging markets, particularly in the first half of last year and by the time we got to the third quarter, i think that investors were looking at this reevaluation, let's call it a devaluation of growth areas and saying, there may be opportunities and it is one of the reasons we have seen non-us markets outperform. we have seen movement back into fast-moving companies in the u.s.. lisa: when you teach this segment talking about negative rates for more than a decade, at least in europe, and the

unwinding of it ending with a whimper, can you write the book that it was successful, that is a common cash this economy extra -- extricated itself from the financial collapse? abby: we don't know yet but we are moving in that direction but we are not finished. it is not just looking at the economy but looking at financial buds and i have concerns because we don't get -- yet know what the results were in 2022 for lots of the very leveraged products. including private equity, we don't quite know what the impact will be on the economy of the production in capital available to venture investments and so on. i also think that active managers who were ok but not great and levered up their results so they turned to a dime instead of a quarter as they reported to their clients, we don't yet know what the full extent of the damages?

tom: what i think is so important here and it goes to the body of your work, we all enjoyed the carnage of 2022, whether it was 60/40 or spac's, all the stuff that was embedded at columbia business school. we have to -- the hallmark of joseph cohen analysis is that you have to be in the green -- the game. the people who are in cash -- away from the equity markets, speak to them. abby: many individual investors have to consider other things like their tax situation and the risk tolerance. all of my work has been focused on institutional investment -- investors and we have seen this reevaluation of assets in 2022 that makes me far more comfortable than i was, nine or 10 months ago.

for bonds, 15-18 months ago when i thought bonds were incredibly overpriced and yields were too low and we have now seen significant change. the fed, like everyone else, will be doing a small increase this year but most of what they will be doing has now occurred and they might do a little bit more but after we have seen this extremely large rate increases, most of the damage has occurred to bond so that looks like -- there reevaluation and equities makes it more appealing. tom: i have to squeeze in -- it's in. how does the -- how do the zombie companies, never been profitable companies, how did they work out in 2023? abby: i think they will be failures and good property

investors -- i think strategic m&a from successful companies will be taking a look at these operating assets and figure out ways that they camera -- up -- they can acquire and improve the margins. what i am worried about is the potential for the debt crisis, the debt ceiling crisis to become real. the reason i am worried about it is i take a look at some of the people in the republican who have publicly stated they think it is ok at the u.s. goes into default. that suggests a big problem and i will be watching the meeting at the white house between president biden and speaker mccarthy. tom: professor joseph cohen at columbia business school. i think like roach, roach went

to yell and it is brutal. lisa: he said it was fascinating. the idea that we priced out free money in stocks and giving equal fear -- feel in terms of risk and reward and the ability to look at what companies are doing rather than financial policy but the question around the less liquid areas and you mentioned the black rock real estate fund and the question of redemptions and what happens when you get the same kind of rectitude -- reckoning as last liquid areas. -- less liquid areas. tom: i think it is -- lisa: we haven't seen it at everyone. tom: are you ready for 1:30? a columbia professor will join us at 1:30. the fed decides, look for that this afternoon and we will be speaking with jerome powell. good morning.

lisa: no we won't. [laughter] ♪ as a business owner, your bottom line is always top of mind.

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jonathon: new york city this morning. the fed decision just around the corner. the countdown to the open starts right now. ♪ announcer: everything you need to get set for the start of u.s. trading. this is bloomberg "the open" with jonathan ferro. ♪ jonathon: live from new york, coming up, fed chair jay powell set to downshift once again.