♪ >> rates are going up now, not because of central bank speak but they are going up because growth will be stronger than expected. >> strong labor market and inflation that remains persistently high doesn't support and he kind of pivot by the fed. >> the equity markets on the bond market have not believed the fed. >> if you look at the statements from the central banks, they are being hawkish. >> the labor market seems to be a stubborn nuisance for the fed. >> this is bloomberg surveillance. jonathan: you are a liar.

congress was on fire last night. tom: i thought of that. lisa: it was a circus, that's what it felt like. jonathan: lovely, good morning, good morning. from new york city, this is bloomberg surveillance. futures are down a quarter of 1% on the s&p 500. i know we are laughing but we won't talk about that. let's see what anne-marie says about this. we need to talk about chairman powell as well. a note from bank of america said -- paul volcker has left the building. that fed's chair is not the fed

chair that sits in front of us now. tom: the one with the best perspective yesterday was michael darda. the idea is the worry, is it seven these inflation, a korean war inflation? he was brilliant yesterday, going back to friedman and saying it's neither. it's an inflation having to do with the biden stimulus, the backend end of the pandemic stimulus and we are weaning our way off of it and that's where the debate begins. it's not paul volcker. jonathan: between the fed and this market, the gap is not that big anymore. maybe we don't listen to chairman powell in quite the same way and just focus on the information. lisa: is it the bond market or the stock market? this is the divide. bond markets are hearing what jay powell is saying. he is being more nuanced about

in the bond market here's 5.1% terminal rate for longer. does the stock market? jonathan: given the rally this year, perhaps not. lisa: at what point do we close that gap in what has to happen in order for this melt up field to be dissipated? jonathan: we have to see some stronger data on the labor side. you talked about february 14 next week. tom: others have as well. jonathan: you are desperate to do this? tom: i don't want to talk about it. jonathan: you've referenced it four or five times. tom: i spoke with mr. rubenstein after the interview yesterday and i mentioned him three times because the inside was a four pointx percent treasury. with a vengeance, things cost money now. that's what we are seeing.

jonathan: you say let's by the front and and take 50 and run for the hills. what we heard yesterday is the reinvestment risk one or two years down the line, can you pick up 450 words you have to take the original -- additional risk and more risk? that's the kind of decision you have to make looking at next income at the moment. lisa: especially if you buy into this rapid inflation. a lot of our guests seem to think that duration had been overplayed. they were a little less confident going into 10 year treasuries at 3.5% than they were a couple of months ago. maybe the reinvestment risk of not being in a longer duration instrument is not as great as it was a few months ago. jonathan: equity futures are down about a quarter of 1%.

people still don't know what you're are talking about. do you want to explain what you are talking about in a moment? the 10 year is 3.6490 and euro-dollar, one .07. lisa: hard to parse out what to pay most attention to especially if you have a host of speakers from the federal reserve coming out to do damage control after the confusing response in the markets. this is the fed parade. the new york fed president, the fed governor, the fed vice chair, the atlanta fed, neel kashkari, and criswell are all lined up today. is there nuance that they highlight that people read into when jay powell said yesterday -- he didn't come out and say i

don't like the market rallying when i talk. biden and his cabinet are going around the country and discussing their plans and president biden will be in wisconsin and janet yellen will visit a battery factory in tennessee and gina raimondo is headed to new york to talk about the semiconductor manufacturing how to grow domestic production and that's getting some interest in markets and from a policy perspective. the earnings spree continues today and the focus is on the consumer. mgm after the market, how much do people keep spending and that could give us a sense of how long we could see the disinflation on the good side and the lack there of the services side. jonathan: thank you very much. point of order on the difference

between parliament and congress. in england you would be asked to leave. tom: i witnessed it and i was thunderstruck in the violence of the debate how cordial everyone was. jonathan: they were still polite? tom: yes, whatever the debate was at the time, there was still a politeness like you every day. jonathan: i appreciate that. joining us now is jonathan stubbs, great to catch up with you. has jim and powell dish has chairman powell given us a green light to buy risk? >> by risk, you need to get macro and fundamentals and technical's need to be on side. if we are religious about the yield curve, when it's inverted like it is, it hasn't been a great time to take on risk

blindly. there is no strong signal there. you have to believe the u.s. nominal growth number which will be going around 4% in the recovery next year is enough to jews earnings? on the technicals -- to juice earnings. we are not getting the same green lights we got in october so it's tough to take what powell said and go for risk. tom: there was a strength to the ftse yesterday with a researching equity market within the united kingdom. is the ftse for real and it will it be some sort of new generation post-pandemic? >> the u.k. was probably the strongest developed equity market last year because it had

the best natural stagflation hedge within the index. they had commodities and financial growth well set. if it wants to retain the leadership in global equities which we think it can, it has to pivot to the rest of the market where you catch up with the natural stagflation hedge. it needs the dollar to be softer which is a key call. if you get a softer dollar and stronger sterling and you get the mid cap stocks performing well the second half of this year, then the u.k. can be one of the lead parts of global equity markets. the u.s. no longer is the sole driver of the global equity block where it has been for so many years. lisa: how much of that argument

is set on tech dominance in the u.s. and the lack there of in the european benchmarks? >> that's a big part of it. hearing your conversation before, if you take the nasdaq 100 and you look at the free cash flow yield gap between the nasdaq and two-year risk-free over the last 12 years, it's averaged over a few basis points anyone could have what you as tech and taken the 400 basis point you'll pick up now the yield pick is zero. clearly that's a function of house deeply the short and has moveout but it also shows in relative terms how yields pickup advantage that technology had and secondly, the circus free cash flow yield of you as tech provided relative to the broader u.s. markets over the last 10 or

15 years, disappeared around 18 months ago. you used to be able to buy u.s. technology and harvest this surface cash flow premium and tech was a cheap sector. it no longer is. to get the same tech leadership going forward, we need to go back to free money and that's not happening anytime soon. lisa: why do you think the market keeps rallying? almost every investor has come on the show and says the same thing you do. >> if we keep discipline, it's hard to get positive risk in terms of equity. it's hard on the fundamental perspective. u.s. equities are trading eight .5 times and it's more expensive. they only do it during liquidity bubbles.

we have had extreme positioning back in october with technicals supportive of risk on and that's been playing out and we had capital chasing that. the only signal to day to take on more risk in the market are price signals themselves. that can keep going for a while but it ultimately needs the fundamentals and macro to support that and that's where the challenges for most buy side/sellsiders. jonathan: thank you so much. tom: i'm waiting for the bears to readjust. how do they readapt and reinject -- and readapt resiliency? jonathan: will they find the courage to be bearish?

that is the question, the courage to be bearish. sarah hunt is joining us in the next hour. we will catch up with what's happening in d.c., a chaotic state of the union address. ♪ lisa: keeping you up to date with news from around the world's -- president biden's state of the union address for shadow wood could be his reelection stump speech. he highlighted accomplishments on infrastructure, climate and consumer productions and his first two years in the white house but there was heckling from republicans on social security and medicare here, the border and other issues. turkey has deployed thousands of soldiers to areas struck by two massive earth wakes and they will help in rescue and recovery efforts and the death toll is now gone over 8000 and searchers are still pulling survivors out of the rubble.

jerome powell is sticking to his message that interest rates need to keep rising to put down inflation. he floated the idea that rates may reach a higher peak than traders and policymakers anticipate. he said of the job market remains high, they had to do more. the ukraine president will be in london today to meet with the prime minister. he will discuss british support for ukraine's military including sending equipment to help counter and expected russian offensive. the prime minister will offer training to include ukrainian fighter pilots. global news, powered by more than 2700 journalists and analysts in more than 120 countries. i am lisa mateo and this is bloomberg. ♪ ♪ welcome to a new era of flight. if your business kept on employees

through the pandemic, getrefunds.com can see if it may qualify for a payroll tax refund of up to $26,000 per employee. all it takes is eight minutes to get started. then work with professionals to assist your business with its forms and submit the application. go to getrefunds.com to learn more. ♪♪ what will you do? will you make something better? create something new? our dell technologies advisors can provide you with the tools and expertise you need to bring out the innovator in you. the first time you connected your website and your store was also the first time you realized... we can do anything. cheesecake cookies? [together] the chookie! manage all your sales from one place with a partner that always puts you first. godaddy. tools and support for every small business first. thanks to avalara, we can calculate

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>> folks, the story of america is the story of progress and resilience. two years ago, covid had shut down or businesses enclosed their schools and today, covid no longer controls our lives. we have already created 800,000 good paying manufacturing jobs, the fastest growth in 40 years, more than any other country on earth but we have more to do. food inflation is coming down,

inflation has fallen every month for the last six months. jonathan: the president of the united states on the state of the union, live from new york, good morning. on the back of that address and chairman powell's interview in washington, equities look like this, down after a bounce yesterday. we are lower on the 10 year yield by a couple of basis points. there is a ton of fed speak today. i think you listen to william's front and center. tom: i don't disagree. i agree that mr. williams of san francisco has serious economic shops and has huge analysis. lisa: a lot of people think the dot plot has to go higher.

tom: let's get to the state of the onion with anne-marie hordern. i love the what -- what the washington post did where they had the themes of the speech and it's simple, it was the state of the economy. let's start with basic civics. why did the present focus on the economy? annmarie: you can go back to james carville who says if the economy is doing well when you are running for president, that's good in the present was given a gift friday with low unemployment and he wanted to lean into the economic work his team was doing. he took over the presidency and his administration was dealing with high unemployment, still dealing with covid and they were dealing with high inflation. he feels he was able to tame all of these things at the same time keep a robust labor market. the issue yesterday he talked

about was not resonating with the public, the economic anxiety and how he still season were work to be done but he is optimistic and he thinks this is an agenda that democrats could run on. this is somewhat of a soft launch for a 2024 bit for the president and the biggest issue that congress is facing is obviously the debt ceiling and he wanted to make sure he focused on that and paint a different picture from what some republicans want to do and what the democrats want to do. jonathan: it does not resonate with the public. half of americans say they are financially worse off than they were a year ago which is the highest share since 2009 so what can they do about it? annmarie: many americans, maybe they kept their jobs and we see a low unemployment rate but they are not feeling it in their wages because of high inflation.

the more inflation comes down potentially, that is something that could ease concerns for americans and potentially help this administration but that's the root cause. they spoke about that on the record calls ahead of the state of the union and the president wants to address this economic anxiety and it comes at it from a human place where he says he know what it's -- he knows what it's like living from paycheck to paycheck. at the moment, it is not resonating. jonathan: we know this brings up division in congress which is no surprise. where you can unite congress is on the chinese communist party. the president said maybe a world leader should change places with xi jin ping. annmarie: this was an interesting comment because this was off script, not in his prepared remarks. he directly named xi jin ping

which was not planned. this was a bit of a moment for him to take a hit at beijing. at the same time, these comments were also slightly muted in the sense that the president didn't directly named the surveillance balloon. he gave it a veiled reference. he said as we did last week, we will defend their sovereignty but he did not discuss the baleen -- the balloon head-on. make no mistake, the president gave similar remarks about china. he wants to deal with china on issues like climate change that help american interests but also wants to make sure they are combating china especially in the economic sphere. lisa: it's interesting where he went off script and on the energy portion he went off

script, talking about the next decade that we need to rely on fossil fuel companies and pare back some of their -- our reliance on fossil fuels. this went against some of the base. what was the reaction on that? annmarie: when he said we are going to need oil and gas for another decade, the republicans in the chamber laughed. they were laughing at the president in this off script moment in this line is likely going to come back and haunt the president if he decides to run in 2024. this is something that the progressive wing of his party does not want to hear and this is also something the president campaigned on. he was a climate candidate and he made climate change a key part of his candidacy and reality was different when the president took the white house and they dealt with sanctions against russia and a huge energy crisis and that meant five dollars per gallon gasoline and

now he says they need fossil fuels and they want these companies to drill more. jonathan: there was one big thing missing and that address yesterday. where was that happy birthday for anne-marie hordern? just a little subtle happy birthday, wouldn't that have helped? annmarie: no comment. jonathan: no comment? amh forgot my birthday in december. annmarie: that's not true. jonathan: that is true. annmarie: i think i also sent you ice cream for your birthday. jonathan: a day late. happy birthday. this is an incredibly sensitive time. lisa: what are we talking about? jonathan: it's an emotional time. tom: i'm glad you brought up the gallup hole.

the state of the union, we talk to elites and there's a whole another world that this president is trying to address and frankly, the republicans have a huge vested interest. the republicans have a rural, conservative vote in a gets lipservice within the major media including us. lisa: one of the most noteworthy aspects of last night trying to wrangle the republicans -- was kevin mccarthy trying to wrangle the republicans. where is the gravitational pull on both sides of the aisle now? jonathan: the biggest division in congress is within the two parties and not between the two parties. that will be a problem for president biden and the problem for any republican who wants to unite this party in the primaries.

tom: somebody yesterday dez yesterday said this is so unusual. a reading of history is this is normal. it's normal in this part of the cycle and goes back to an exceptionally fractious democratic party to the 19th century. 64 was a donnybrook for the republicans and it's a lot like what it is now. jonathan: the 60's? lisa: i had the age of aquarius in my head yesterday because of you. jonathan: i think barry goldwater would have liked the flying carita brothers. -- burrito brothers. ♪

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jonathan: equities are down a third of 1%. good morning to you. we look like this on the s&p 500. the nasdaq 100 is up 16%. we are higher in the bond market by about nieces points so around that level from the lows of friday morning. we all wanted to know one thing,

has chairman powell changed his mind on anything after the payrolls report friday? take a listen. >> the labor market report for january kind of shows you why we think this will be a process that takes a significant period of time. if we continue to get strong labor market reports are higher inflation reports, it may will be the case that we have to do do more and do more hikes. jonathan: those were the two bookends of the whole news conference. at the end of the interview, you got if it continues, we might have to go higher but for many people, no change for chairman powell.

the jobs report from friday leaves us unconvinced that wage growth will continue to moderate meaningful enough to return price inflation to 2%. he is not alone. lisa: many are ratcheting up their expectations of what the fed will do but the number of that officials who said they didn't believe that report. it was the skepticism about the data because we heard this again and the yen. even jay powell said none of us were expecting this. tom: what struck me was the productivity report which was legitimate and labor costs, if you didn't have that, i would totally agree with you. jonathan: the nonmanufacturing ism, boom. a lot of things line up. our next guest is looking for 300,000 and that was the word on the street. then we got 517.

tom: he is the chief u.s. economist at citigroup and has provided intellectual leadership over the last year. we talked about the terminal rate. i want to talk about your days at ucla. you had the heritage of ucla with one of the bravest economists i have ever read. he was way out front in the 60's and 70's and some people said he was the marine coming out of the trenches for paul volcker. he would say what do we have going on with the money supply coming down? should we pay attention? >> you are right, ucla was a great place to go to school and i think the message was to

always take the theory seriously but confront the. with reality. i think that's what we would be asked to do today. in terms of m2, it's coming down but after being up substantially and that's wade's difficult to analyze this economy. we have such big movements during the pandemic, savings built up and we are trying to figure out things moving in the opera -- in the opposite direction. how much of the tailwind will be with us for spending and price pressure and going back to the jobs report, it looks like we may have more than a tailwind than we thought. tom: what does your confidence look like? we've got this february 14 report so do you have confidence to 3%? can we get in the vicinity of chairman powell's 2%?

>> i think we are a little bit away from that. we have that goods inflation has cooled but that's what we are seeing in these monthly inflation numbers. a big part of what we have seen is the used car prices coming down and goods inflation has slowed so that's good news on the inflation front. if you look at the non-shelter services, services away from housing, those are still inflating at a rate of 4% annualized. maybe some of the biggest, most aggressive inflation on the good side is off but we have services inflation still. lisa: why do you think chair powell is not more aggressive? why isn't he taking the same wyoming town?

>> i was a little bit surprised. david rubenstein set him up to make some changes from what he said last week versus the job number. i think you can tell from the body language and reading between the lines that there is a change probably. it's uncomfortable for a fed official to make too much out of anyone monthly number but it's not just that. if you look at the pace of job growth prior to the january reading, i think we are close to 300,000 jobs per month so i don't think we will continue to create that. even 300,000 would be enough to keep the unemployment rate from going down. it's a very tight labor market is hard to think that wouldn't create wage pressure. lisa: we are seeing wage pressure declined so what do you

make of that? >> that's one of the most interesting things. we have a tight labor market that's tightening further and across a range of measures, we saw softening in wages. goes back to this being a softening from historically rapid wage increases. we were reopening the economy at once in every restaurant was trying to hire workers at the same time. that will create a surge of wage pressure. maybe we have come off of that a bit and come down from 5% wage inflation. with a tight labor market, i wouldn't expect that to slow further and the risk is that it will accelerate. tom: after the march meeting, may, june, which of those meetings is the crucible for this fed where they have to decide whether they are phillips

curve driven or not? >> the march meeting will be important because that's where chair powell will not be able to do what he did in the interview yesterday he cannot say the data will take us where it does. the fomc will have to come out with their projections for the economy, inflation and for the terminal policy rate. they have it at 525 but maybe it should be revised up so we will see when the inflation data comes in. the march meeting will be important. it looks like a 25 basis point rate hike is white likely in march. -- is quite likely in march. maybe another hike in may and we think they will hike again in june but this is where it might get more difficult because they will have to navigate between a labor market that if things

tighten further, should be slowing and inflation is still too high so how will they navigate the tension and the reaction function. they have not had to do that yet. lisa: i love reading your notes. everyone thought we would go bound -- go down to 2% inflation but there was a frustration your voice that the data has not changed. they will still have to hike that much more. what has the response been from clients, the pushback as this view of the market has shifted from rapid disinflation to maybe not? >> there is a stability from chair powell, trying not to change too rapidly as the data comes in. the market will change rapidly and they wonder when the next day to print is coming in and we have a series of 4 inflation print so it makes sense the

market got more excited about these outflows. i think our job here as economists is to look at all of the data and figure out what is most likely in terms of an outcome. despite slower price inflation and the softer wage and elation, looking through the did the type labor market and services inflation, we weren't convinced anything had slowed down. you see how it takes one billion all of a sudden the markets are different. jonathan: makes you wonder what happened to jackson hole powell. andrew, thank you. it was almost comical yesterday, the exchange between rubenstein and powell. the fact that jerome powell

believes 190 thousand dollars is a fair price for the fed president is interesting. lisa: you see some pushback from the ecb. some of the staffer or say they want a raise and they are saying we have to dampen wage pressures. how much is this a sticking point? tom: delta airlines is out with this news -- it's simple, it's a 5% pay increase after 4% last year, 9% in 24 months. the pilots are 30 for -- are 34% over. jonathan: they are desperate to find pilots in the industry. tom: there are people who know more than we do but is this what he was talking about when companies just capitulate? jonathan: did you see the

potential pay rise for the labor secretary? you could go from $235,000 per year to $3 million. lisa: people get mad about how much money they make after being in public office but that's why they take jobs that don't pay that much. if they pay the more -- tom: ferro mailed it exiting the secretary's comments the other day. you were out front. jonathan: he said no news today but news tomorrow. i can't wait to get rid of this guy. does he cover ice hockey as well? he's a huge bruins fan. tom: jeremy jacobs who runs the

bruins was a campaign contributor. lisa: did you see the puns? this has been brewing for a while. tom: this guy was one of the toughest union negotiators in the country. he's going to 800 prima donna's he has to corral. jonathan: if you just tuning in, you have no idea what were talking about the labor secretary is going to be an executive hockey person. from new york, this is bloomberg. >> lisa: keeping you up-to-date with news from around the world -- president biden called the russian invasion of ukraine a test for the ages and it's a test he says the u.s. and a

snake to allies -- and its nato allies have passed. he also plans to stand with the president of ukraine as long as needed. cvs is pushing deeper into health care.it in an all cash transaction with a value of about $10.6 million. oak street hopes to reinvent care for medicaid paid -- medicare patients. cvs says the deal will increase health air access and underserved communities. global news, powered by more than 2700 journalists and analysts in more than 120 countries. i am lisa mateo and this is bloomberg. ♪ ♪♪ what will you do? will you make something better? create something new? our dell technologies advisors can provide you with the tools and expertise you need to bring out the innovator in you.

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it has a long way to go. these are the early stages of disinflation. we think we will need to do further rate increases and keep rates at a restrictive level. jonathan: this is what got the equity market going last wednesday with chairman powell talking yesterday with one qualification, he started to lean into the idea of this not leaning into services. no real change from wednesday. i wonder if the 18 speakers today and williams of the new york fed will give us more visibility the stock market ballooned on the initial comments. i was fascinated how the stock market worked its way back the afternoon. jonathan: they were trading on headlines that weren't anything. he repeated the discipline --

the disinflationary process. the market rallied against financial conditions. he said at the labor market can 10 use. lisa: if you read the transcript, he's not that dovish. he mentioned the word disinflation and everyone bought on the risk assets. it was nuanced and basically saying we will have to go further and raise rates to a higher level and he repeated that area this will not be a panacea for tech stocks. jonathan: if you say the same thing in the world around you changes, is the meaning the same? lisa: i think you are right. the meaning does change because there is a political opportunity for him to say something to the market. the data point is important that would have changed the point in

markets. maybe he doesn't have the consensus. that was notable. jonathan: we will find out later from the fed speakers. i know you are excited. tom: it says -- it's as exciting as the auction process. serious academics on the oddities of americans movement out across the atlantic. let's get specific with china. the washington post had the grid of what the theme was last night. were you surprised how china was underplayed? >> i was. i call it foreign policy minimalism. not only was it brief but it took a long time to get there. on china, i wasn't surprised.

this is a president that wants to resume diplomacy and has made this clear from the start and the last thing he needs to do is to inflate the china threat. it's already been inflated by the balloon and the american public have seen it. the republican house committees are hard on china so i think the president was a little cautious because he knows he has a tough road ahead in diplomacy. tom: how do you juxtapose the bipartisan angst of washington and china with the fact that everything in my kitchen is from china? how do we juxtapose our business relationship with their geopolitics baggage of decades? >> this is what biden is pushing

on, he wants to see, i imagine you have a high-tech kitchen and he wants that tech produced and manufactured in the united states. you cannot link it directly to china but it's clear what he was saying come let's make the semiconductor chips in the united states, let's manufacture here in the united states, let's do jobs, the dignity of work, that is code in part or china is stealing jobs but he wasn't directly linking it. businesses want in and it's not only about production but it's about consumption, access to chinese consumers matter. this is a president who is very clear that it is about

near-shoring and investing in the united states and so much what we heard last night was not only about jobs but jobs with dignity and higher wages, taxing corporations and if he successful which is a toll order, the tax on billionaires. lisa: let's talk about the chip manufacturing. the commerce secretary will be coming to new york to talk about that. do you think the investment so far is sufficient to bring some of the chip manufacturing prowess into the u.s. from the likes of the taiwan semiconductor company that has consolidated its market share? >> is obviously a start. it's a significant start. it's not the money that has been agreed but it's the implementation. it remains a tremendously

competitive space as you have noted. china is looking as that in leading chinese economist had made it clear this is a significant challenge and it will be for them. they will be working hard to find other partners that can help them as well. it is perhaps not as large a number as one would like to see but it's very significant. lisa: do you think president biden emerges more as the front brother for 2024? did he deliver a performance that turbochargers his candidacy? >> it depends on who you are. if you listen to the response we saw from sarah huckabee who clearly made this about age, i am the youngest governor in america and president biden is the oldest president in the united states -- that plays very

well across significant parts of the republican party. in terms of getting the democratic nomination, if he chooses it, he's likely to have the support of his party but it's difficult to imagine anything over the -- other than that. he really put tremendous energy, visible energy and engaging with his opponents in the house then demonstrating that he was in the front foot. that moment when they were heckling and he committed to holding onto social security and medic here. age is an issue but he was defying the odds which was the intention in that speech last night. jonathan: you refer to the governor of arkansas talking about age. what about that same divide in her own party? >> i anticipate seeing nikki

haley toss her hat into the ring. we are bound to see ron desantis, bound to see mike pompeo, the former vice president as well. -- i think the field is likely to be so broad that the risk that many anticipate is that place to donald trump's favor at a time when he is not doing especially well even amongst those of previous aboard him. that that party better figure quickly. you will have people in the republican party and the biggest division. you will get everyone else

diluted across a range of categories. if it one for the primaries, you have to figure out who you want. tom: i was at a convention in 2004 and they realized the convention wasn't about the party, it was about the narrowness. i don't think a large part of the audience understands is not about publicans and democrats. this will be a process left right is just liberal conservative polarities within each party driving the bus which is what we saw last night. jonathan: we will pick up on that story in about 30 minutes. lisa: cooper came out feeding expectations. -- uber came out beating expectations. tom: there is a footnote here

that the abramowitz family led that marginal lift. jonathan: coming up, sarah hunt. ♪

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>> rates are going up now not because of central banks, they are going up because growth is stronger than expected. >> the strong labor market does not support any credit by the fed. >> the market just does not believe the fed.

this labor market still continues to be a nuisance here. powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg surveillance. jonathan: for our audience worldwide, this is bloomberg surveillance. futures are down .3%. the fed speak extravaganza starts at 9:15. john williams, front and center. john williams matters today. lisa: we will hear from everyone. what we heard yesterday as well. to me, i want to know whether there is consensus? that will be the real question.

tom: i don't agree with that. i don't care what all of the individual presidents think. in england, catherine mann made an adjustment and everyone stands up and listens. jonathan: it is different here, they are scared of dissenting. we are getting to the point where you would think they would start to dissenting when we get to the level when someone says this is sufficiently restrictive and other people will push for rate hikes. lisa: if you don't get any dissent, maybe chairman powell just had a bad day or was not feeling harsh in terms of his messaging. it does matter when you have the consensus driving the messaging and driving the optionality. jonathan: we have given him some steak and sometimes it's deserved. i like the way he communicates.

i refer to his blogs a lot. let's get to 540, we need to hold. he is push that story quite well. lisa: this is really my question, is the chairman trying to reflect the status of all of the fed officials or is he driving the boat? is he the one who is pushing back on this idea that they have to be more hawkish than markets are currently pricing in? jonathan: investors have been underperforming their benchmarks because they entered underweight equities waiting for slowdown that has not happened. this is from a hard landing to know landing. tom: as everyone who has been

how both kids in front of valentine's day, i don't have any words of wisdom on what the bears are bull should do. but everyone will recalibrate with a vengeance. maybe february 15 is the day of calibration? -- recalibration? equity futures are negative after gains yesterday, were down .3%. your 10 year is 3.6472. lisa: the new york fed president, lisa cook, michael barr, raphael bostic, and chris waller. that is all the people who will be speaking today. i am curious to see with the

linear thread is. if there is a sense of going to 5.1%, 5.2%. we are also looking janet yellen visiting a battery factory and commerce secretary talking about what we are doing with semiconductors, incentives and how that could push the sector to powering through. over shares, list take a look at that. up 8.48%. i am curious if we get lift later in the week, how much is

this consolidation of market share and how much is that people are willing to pay a lot of money to get from one place to another? jonathan: off the back of what is happening with wages two. lisa: based on the fact that you will have to deliver higher wages to drivers, there is still left -- gas left in the tank. jonathan: sarah hunt is with us, from alpine woods capital investors. sarah: we have all been anticipating a change in earnings and the fact that we are not getting it begs the question, what is that mean? his phrasing that way also changes the discussion because

everyone is waiting to see how bad things will be and what that is implying that right now it's not so bad. maybe we have already landed in is not such a big deal? maybe inflation picks back up again. when i listen to jay powell speech the other day, how do i lend and stop worrying and love the stock market. it seemed that all the things he was doing prior, we need better financial conditions, it seems we shifted in the market is like, maybe it's ok for us to keep going. tom: the punchline is that last year was the worst years since the 70's. you hit the ball out of the park, over the wall, you were

down way less than everyone else. how do you switch to a bull? i'm looking at the value lined index and it's giving me sides of life. sarah: for different people you have different strategies. being able to deal with stocks last year that were good cash flow, dividend payers, good buyback prospects, that worked really well last year. this year, everyone came out of the gate expecting a bad year. we all thought the pain trade was higher but not this quickly. i don't think you want to own the stock that is more of a rebound. i think you will get more fundamentals will matter later in the year and you gotta snap snapback in technology.

people are chasing stuff that had been beaten up badly last year. lisa: how do you parse out what is fundamental and what is technical? whether you want to lean into technical because there is more juice to run? sarah: we try to stick with fundamentals because we a fundamental shop. what is the prospect in an economy that may or may not be acting as well as people are expecting through the end of the year? i don't think inflation is a one-way trip up and down. that is what the market is implying. i think we get stuck at a higher level and that results some of the folks that need money to survive and may need to borrow at some point. tom: j.p. morgan said how lonely the equity. were. it was a really sharp chart. lisa: you felt connected with

them? tom: i wasn't aware of the level of gloom out there. lisa: perhaps people are trading differently, you talk about how valuations look high and there are other areas that look good. what are you bullish on? sarah: if the economy is getting better to the extent the people are getting excited about that, i think things like energy will work well. this whole discussion last night, the state of the union, i would argue there is a demand supply situation that will not be -- whether there will be a budgetary issue.

i think there is some opportunity there. some of the older school economic, old industry stuff, if we really start restoring and rebuilding in the u.s., you have some real opportunity for companies that play into that. jonathan: funny were talking about reassuring when investors are thinking about sending money abroad? ed: there is a rebound here and there also seems to be relaxing on the governments part of not going after the companies a way that they were. if the government is going to back off, then there is some room for them to run. you don't have as much information and that's a snapback. jonathan: sarah hunt of alpine

saxon woods. what a rally we are seeing with some of those names. tom: china, absolutely. i wonder how they will bail out real estate market? there is always a circle filter through the major cities, they bailout real estate. when does that happen? jonathan: you get the snapback growth off the back of reopening and then you have this extra headwind which you will question how durable that riley might be? lisa: chinese tech stocks, just mention chat cbt. jonathan: coming up, lisa shalett of morgan stanley.

lisa: president biden's state of the union address foreshadows what could be his reelection stub speech. he highlighted accomplishments on infrastructure, climate, but there was haggling from republicans on medicare, the border and other issues. help operations continue in turkey. searchers are still pulling survivors out of the rubble. volodymyr zelenskyy is in london to meet with the prime minister and later, king charles. he will offer to train ukrainian fighter pilots. he will speak to the house of commons and bloomberg terminal users can watch a mliv .

cvs has agreed to buy oak street health with an all cash transaction. oak street aims to reinvent care for medicare patients with low incomes and chronic health problems. the deals will increase health care accident -- access and low income communities. zoom has eliminated 50% of its workers, 1300 jobs. the ceo says that the headcount tripled in three years. he's reducing his salary and will give up his bonus. global news 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i am lisa mateo, this is bloomberg.

♪ j.p. morgan wealth management.

>> my republican friends, there's no reason we can't work together and find consensus on important things in this congress. the world is watching. putin's invasion has been a test for the ages, a test for america, a test for the world. we are committed to working with china but make no mistake about it, as we made clear last week, if china threatens our sovereignty we will act to protect our country and we did. jonathan: the state of the you

know address from the president of the united states. from new york, this is bloomberg. alongside me, tom keene and lisa abramowicz. futures are down .3%. yields are down. uber is pretty decent. lisa: this is such a shocking response that you see in stock markets where you see shares of more than 9% at some point. not only beating fourth quarter but projecting better-than-expected earnings. it's amazing that people left this company for dead. jonathan: the nasdaq is up 16%. was that the outlooks at the end of 2022? lisa: the companies that don't have profits are the ones doing best. it doesn't make sense unless you are going back to an accommodative world.

do people expect that we are going back to that? tom: corporations clear problems. uber is the poster child of thought. there are 43 buys, five holds, his target moves from 35, trading at 37. he has a 75 price target published on uber. these are things that don't get talked about. lisa: you asked about whether people would pay money to have uber deliver your salad? evidently, they do and will. people are still paying for take out.

jonathan: is been written about over the past year, it's important to talk about the issues. that's where the money went in the last 10 years. we did not invest efficiently and that is why last year was about big energy, energy the year before and of their suffered. i know it is way too early to say that some of these names are out of the woods. it will be a tough time for some of these companies. lisa: but i do think you will see more consolidation and i wonder if you see some of the demand from left go to uber? tom: uber has a flipper they get into a better place, that's about it. anne-marie herndon joins us as we pick up the pieces from last night. we talked more about the economy

in our last our and what i found fantastic was the body language behind this aged president of the united states. the focus was on the speaker trying to corral his congresspeople. silent in this discussion was a vice president. what were your thoughts on vice president's place in the pageantry? annmarie: she stood up so many times, she was on her feet whether it was the economy, abortion, veto action he would take if legislation was to land on his desk. she was at her feet immediately compared to everyone else and you juxtapose that with speaker mccarthy he was very polite. there were moments where he said that is not true when president

biden talked about the prior administration and the debt accumulated. there were moments when the speaker was trying to corral the rebels in his group. the standout moment that the presses is leading with this morning, this is what the white house wanted to see. when conspiracy theorist marjorie taylor greene yell buyer when there was talk about the debt ceiling. that there were some proposal from senator rick scott florida about sunsetting medicare and social security. in this moment he said he was willing to have this debate right on the floor. mitt romney nailed it when he said this is becoming like the house of parliament. tom: thank you so much.

john reviewed this again. jonathan: i'm going to say something that might be slightly insensitive. this applies to both parties. american politicians are way too thin-skinned. when you think of the back-and-forth you see in parliament. when i look at the vigor of interviews between journalists and politicians they are so much harder than the u.s.. lisa: i'm curious whether the personal attacks are of the same nature or if it's about policy? jonathan: that's a good distinction, i wish it was more about policy. more of those exchanges over policy and we don't.

politics in america feels like sports to me. you have sports channels that support clubs. they will go on their sport club tv channels is that is all i see take place in the united states. lisa: a lot of people talking about the reality tv aspect of moments in yesterday's speech not least of which is liar. do you see is splintering between politicians that do want to talk about policy and those who are appealing to the social media crowd? jonathan: when you look at what happens, chairman powell goes down to washington for the testimony and you see a congressman make a point and all they are doing is trying to make a clip further highlight real to send out to their electorate. it should all be boring, it

should be all about policy. lisa: what will be most clip pable from last nights speech? annmarie: the liar moment. this was the moment they wanted this moment. the president looked nimble. he was very reasonable. he said i more than happy to converse with you. and when he said, i am glad we are unanimous in this moment. basically taking higher ground of the debt ceiling debate and showing to the american people you could have a reasonable individual. someone who doesn't go for showman type tactics or a republican party that has a number of rebels.

you had people like senator rodney he was appalled but it's a job at this point, this happens all the time in other countries but for the u.s., something new. jonathan: the latest from the state of the you and. looking forward to whether the president throws his name forward and let's go for 2024. tom: the options are extraordinary, can you imagine the debates? lisa: i think they've already started on social media. tom: what's it gonna be, a people from each party? i still like the british way better. jonathan: it seems to be more straightforward. futures are down .3%. from new york city, this is bloomberg. ♪ helping to build portfolios that redefine what's possible.

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jonathan: equities are lower, down .3%. we are down a little more than .1% on the russell. yields are still through 440 but they are down 2, 3 basis points on the four year. the twos versus tense are still around -80 basis points.

the two-year is close to 4% on friday morning, think about the euro-dollar in the range we've seen last week? right now it's 1.0747. lisa: taking a look at some of the names that have been reporting and moving in the morning ahead of the opening. over shares are up more than 7.2%. at $37.40 after reporting better earnings for the first quarter. how long can you get gains when it comes to rideshare services and food delivery at a time when consumers will be pulling back? revenue rose 49% in the third quarter. under armour is up 8.4% holiday

season was strong. is this a retail story or a bifurcation between under armour and macy's that are not getting some of the sales? to fully shares are down almost 5%. it was weaker than expected earnings. a more constructive tone for the first quarter. it's hard to parse out. the earnings have been pretty dramatic in terms of spurring a response in markets based on be or miss. and then after a couple of days, you will see the shares rally again. the police said they did see some margin compression. you have seen disinflation and food but it seems more complicated for some restaurants. jonathan: fed speak today, real

rates across the curve are significantly above 2021 levels in markets are pricing monetary policy to be restrictive well into 2024. this increases the odds that the fed will pivot to a pause. tom: this is an important interview on what we are and what we will do next. ed al-hussainy it is with columniathreadneedle but his path is from colgate university. on to harvard with a guy named summers. let's cut to the chase on the quality of disinflation that you

see worldwide? this is a major debate in the inflation report. is it a rapid disinflation fear? or is there something else going on? ed: there is something else going on and that's the centrality of the labor market to the inflation story. we are seeing in the elements of the labor market a pretty rapid decline and wage growth without damaging the court of the labor market in terms of employment. that's a good momentum story in my mind. tom: what does the fed do to get this right? not over the next meeting but over the next 3, 4 meetings? ed: they are doing what they can which is to stay flexible. in yesterday's interview the most telling part was powell

saying that the data can get you so far. you have to have a story and narrative around was driving the process. from the feds perspective, there has not been a stable story about what drives inflation. they change it quite frequently. this year they have to be prepared for surprises. lisa: do you think there is some story behind the change in tone from powell? ed: consistency. they started messaging the arrival of this pause, the transition from raising rates to pausing they introduce that last fall in a consistent message. they remain on that message despite a day of surprises. nothing has changed that trajectory. lisa: we are looking at stickier elements of inflation, how do you parlay that into a view on

how long the fed will have to keep rates at 5%? ed: it's impossible. no one can tell us that conclusively, right now, is it possible that they will have to raise rates again? absolutely, you can't take that off the table. is it more likely they have to adjust rates lower? absolutely, the odds given that direction. the timing of this is hard to say. tom: you sound like you need more data. yields are doing odd things. where alteration equality is columbia threadneedle? ed: credit spreads compressed in the past 3-4 months. rate volatility has come down and that has been a massive tale

wind for risk. we could see that volatility goes sideways, potentially higher. value and credit is not super attractive. tom: was your two track here? what's your two-year yield bet? ed: when i see twos approaching 450, thus an attractive level. we could have an argument within to use in the euro-dollar space. whether they are underpricing the pause, the terminal rate, those are small elements right now in the story. the two-year yield of 450, pretty standard. lisa: there is an issue as we look forward to the year and people have been betting that europe would be more aggressive with rate hikes this year.

has that story been told already in the price action? ed: not yet, there still room for rays to underperform the u.s.. if you look at the consumer space, the u.s. consumer is softening and if you look at expectations for growth in europe, they had the floor at the end of last year. if you look at where there is room for inflation and growth they raise higher of the beginning of the year. lisa: do you think it is time to lean into the euro rather than the dollar, to lean into international? ed: the euro has a long way. i like the yen a little better. if we are talking about where we

are in the tightening process. to the extent that there are some surprises there, wage growth, inflation moving higher in japan is a much better backstop to the euro. lisa: the wage increase in japan at the highest pace going back decades. there was some rumor about a successor to corona. what is the bet that is least vulnerable to some whipsaw based on the potential for a real market shift that people say is inevitable? ed: you can short rates in japan , you could be long the yen versus the dollar or develop market currencies. the question is, timing and how expensive is that that the whole? i think both are relatively

attractive. particularly if you look at duration in the u.s.. jonathan: thanks for dealing with us, great to have you in the studio. ed al-hussainy . lisa: it was rumored it would be one of his deputies and then others say it's impossible. will they not have to push back at some point? tom: it will be really interesting to see the inflation story in japan. this is a managed reflation. that's an odd concept at the minimum it's original. its domestic policy to avoid 20 years.

jonathan: let's use that word manage, a managed market. they have gone so much further than other central banks have. tom: we forget where the japanese are. jonathan: were they trying to coerce certain companies to get into their index and change their behavior? lisa: is not a market, they own the market. it does become a market? and to be honest, when i speak to investors who are investing in japan, they are not counting on any kind of quick shift because this is not a regime that like surprises. tom: on that note, can i give you a bombshell?

you are better at this than i am. they completely capitulated that they will come everything together. the idea is that they will keep apart hbo and discovery. they completely walk away from the synergy garbage we have heard from a year. jonathan: what's behind that? tom: the number of people that are saying no to their folly, that would be my guess. jonathan: is pollen today? tom: he's got so many vacation days. jonathan: we will continue with bill dudley, the former fed president and now an opinion columnist. he will join us in about 50 minutes time.

lisa: in his state of the union address president biden called the russian invasion of ukraine's test for the ages. a test he says he and the nato allies have passed. full demeanor zelenskyy's in london where he met with the prime minister. he will address the house of commons, bloomberg terminal issues can watch that on life go. turkish president visited the disaster area that was struck by two powerful earthquakes on monday. tens of thousands of soldiers are helping with rescue efforts as the death toll pushes past 11,000. many people are still trapped inside buildings. turkey stock exchange has suspended trading for the first time in 24 years. a selloff arrays 35 billion from its main equities gauge. no word on when trading will resume.

credit suisse will pay bonuses and installments to some of his junior and mid-level bankers. they are overhauling operations after a series of scandals. los angeles lakers star lebron james has beaten the leaks scoring record. it eclipsed the mark that was sent by kareem abdul-jabbar. tickets for the game sold for $80,000 in the secondary market. powered by more than 2700 journalists and analysts in more than 120 countries. i am lisa mateo, this is bloomberg. ♪

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>> even with this latest rally we still think it's a bear

market rally. it probably fails into resistance and comes back down before going higher. earnings growth is just now turning negative. we have only seen that happen four times, every time it ends up being recession. jonathan: there are certain investors like it here forever. it was great to catch up with them yesterday. futures are down .3%. on a 10 year is down to 3.6472. crude is up again .9% to $77 and $.83. tom: we haven't talked about this yet, but point 30, the

trend is in place away from restriction. jonathan: the exchange was thoroughly entertaining but i wish that was something we post on a little more. how does he think about financial conditions? we look at the goldman index, bloomberg index. i think the chicago terminal has one as well? lisa: there is also the loosening of lending standards. do they look at that? that reaction function, how do you learn to love the stock market rally? jonathan: how brave do you have to be bearish into fed speak like that? lisa: pretty brave because he will not push back. he will not say, i need you guys to selloff so we can enact our policy. tom: we move forward to huge

numbers today. do you know what time william speaks today? what are we doing with that? jonathan: you will have the headlines and all that. and you will listen then, hopefully. tom: let's say today is important that we have the right person to talk to. long ago and far away there was hope that the roberts family in philadelphia would invest a gajillion dollars and comcast would go cash free positive. i remember when they flipped on what the hope her prayer would be. mandeep singh on this day for you bert, is this the comcast equivalent for uber where they go to a vector that stays cash flow positive?

mandeep: things are lining nicely for them. i think uber, we know any time a company that works well and has social network of x. for mobility bookings, is pretty impressive that they continue to grow at this pace and inflation seems to be a nice stalemate for this company unlike in a lot of other cases where you could argue that inflation led to price elasticity. we have not seen that for uber. tom: the addressable audience for the cloud business, is that the same way for uber and lift? is there a future audience out there like the cloud for the driving car business? mandeep: consumer tech

businesses are different in this case, all the startups that we're [speaking foreign language] were coming up with new ideas, they will fade away. the standard has changed and to me, that's a sign there will be one or two companies in the space. that's great for this market. i think it should be a duopoly like fedex and ups. you will never get to the out with software companies but you can see them getting those network effects and that's what will drive profitability. lisa: one cliche out of the pandemic is that people were willing to spend $10 to get a salad or sandwich delivered. apparently, they still are. uber eats delivered greater

profit and accounts for 47% of overall revenue. how long can continue in a slow down economy? mandeep: i think if there is a recession or some sort of a slow down, people will pull back. i go back to my point about marketplaces in supply. if you have the most supply, ultimately, you have to adjust your pricing but the volume may go down here or there but you will be the place where everyone comes both from a consumer standpoint and a supply standpoint. that's a great position to be in. i think uber being the op everyone has on their phone. it's a good position for them. lisa: you keep talking about

consolidation of market share. you can win regardless of the cyclicality, how much is uber standing out as part of a duopoly, how much will the cannibalize from lifts earnings? mandeep: you will see their pressure for a company like lift which has to show profitability, free cash flow and it has not come at the expense of expansion. lift cannot invest as much in supply acquisition as uber. with this at a point where it has to show incremental cash flow improvement and that is a hard position. doordash is somewhere in the middle. that is what i mean by the smaller vendors like instacart, there was a time where they were attacking these niche markets. that will fade away and you are

at the point of consolidating all types of delivery whether it's groceries, food, any sort of convenience delivery. that is a good spot for the companies. jonathan: you google, you don't being. lisa: they're trying to change that now. jonathan: you google, don't being. you uber, you don't lift. jonathan: mandeep singh, it was nice to catch up with you. lisa shalett will join us from morgan stanley. tom: an image from the united

kingdom, there was a direct hit on westminster hall and a window was torn out in 1941. there will be a discussion of war in the same historic call where the funeral was for cream elizabeth. jonathan: this is an interesting time because zelenskyy did all the tours of parliament and at the time, they all got a ton of attention. it is getting less and less attention at the moment. the focus we will be focusing on is how much unity there will be to support this war effort. because his check after check after check. the republican party is looking at more oversight. lisa: especially after reports of malfeasance around leadership in ukraine. how much longer can the eight keep coming when fold to me is

saying this is the key time to get ahead of the russian offensive? tom: maria said get out the calendar. like every other war, including world war ii, there is a spring offensive in spring is upon us. jonathan: i can't believe it's been a year. you've seen this a conflict after conflict, the longer it goes on you get this fatigue and insight in ukraine, there's no fatigue whatsoever. thus the urgency and immediacy of war. the rest of the world doesn't seem to have the same kind of urgency as nine, 10, 11 months ago. equity futures are down .4%.

looking forward to catching up with lisa shalett from morgan stanley. ♪ this is ge vernova, helping generate and move the energy that our world needs. ♪♪

welcome to a new era of energy.

>> the spending slow down iss

continuing. hiring freeze,s cutbacks are continuing. >> you will just get a more hawkish fed. >> if we continue to see interest rates remain high, all valuations will be at risk of rolling over. >> we still think it is a bear market rally. >> this is bloomberg surveillance with tom keene, jonathan ferro, and lisa abramowitz. tom: good morning. we are going to fade in the hour with you. we are staggered at 9:00 a.m. and we will hang on every word of williams. jonathan: we all want to know how this federal reserve will respond to that blowout on friday. we got an answer from chairman powell. for chairman powell it did not change the fed's stance. jonathan: the --

tom: i see had with the vix. it is a wall of money that just needs to go somewhere. jonathan: stating the obvious, it is all about the data now. if you rallied too far you ran the risk that the federal reserve would lean against financial conditions. they did not want -- they did not want that to happen. now it seems to me that we can rally and chairman powell is not pushing back too hard. the next big print is next week. lisa: this is the reason why people are rallying on his comments. fed officials do not see activity as part of their tool to distribute monetary policy to the same degree. just to give you a sense of how difficult it is to gauge

inflation, used car prices was one of the biggest drivers of disinflation last year. now it is bumping back. it is really notable. tom: i will go to david rosenberg who invented this at merrill lynch. you parse look at aldi inflation but at the end of the day you have to aggregate, which is the importance of the month over month statistic that we will see february 14. there is no was there data point. mortgage applications came in positive. lisa: that is interesting. tom: why is that interesting? jonathan: you are seeing that in payrolls. you run the risk -- lisa: if you have mortgage applications starting to pick up, this is a symptom of rates coming up. weakness has not been there.

people have been looking for an entry point. if financial conditions is just a bit, all of the dynamism you see for the pent up savings will flood back into the areas that have dis-inflated so far. jonathan: the disinflationary process has started. we barely talked about china reopening. tom: china and you mentioned baidu earlier with the moonshot. we will talk to lisa shalett in just a moment. we are hanging on the data. jonathan: did you get a phone call? tom: 5 to 10 year inflation off the bloomberg terminal is 2.9%. that is called disinflation. jonathan: that is -- lisa: who is most likely to get

called among the three of us? jonathan: t. k. he would keep them on the phone so long. do you understand the history of inflationary expectations? can i tell you? lisa: the rotary phone. he is like "can i lecture you? where did you go to school?" tom: we are back down to 80 basis points. the 2 year yield, 4.5%. jonathan: he was down a couple of basis points, tom. equities are about soft -- a bit softer. tom: lisa shalett here, knowing that things have changed there

is a yield and that means cash has value. we were talking before the show about your outsider perspective where you have 10% cash but the morgan stanley audience ones to hold more cash than -- wants to hold more cash than that. why? lisa s.: we have been cautioning against the fact that we think this is yet another bear market rally, that if we were going to materialize a soft landing we would not be seeing negative earnings and not negative earnings guidance and not negative earnings revisions. i'm hardened that are clients are taking our caution to heart. they are embracing for the first time in 6, 7, 8 years a livable

fixed income yield, meaning net inflation by the end of the year may be sub 4% gives them a real yield and it d -- and they do not have to take any duration risk. we have people piling into certificates of deposit, money market funds, which in many eras were not considered sexy products but are satisfactory for a lot of investors right now. jonathan: do you think that is wise to take on a product where you might have to think about where to deploy capital in a year or two? would you advocate taking on more risk but looking in these interest rates for longer? lisa s.: i think there is an argument there. the problem is right now we have an inverted yield curve, so we

are not really getting paid any extra yield for taking on some of that duration risk so wet we have said to folks is, "let's be patient this year." if we get this mythical soft landing that everyone seems to be betting on than that yield curve will invert. will reese steepen i should say -- re-steepen i should say. let's stay ultrashort duration right now, see how the year plays out, and see if there are opportunities to roll up and login for longer some of those higher yield. lisa a.: what are the biggest inconsistencies right now in markets? bond markets are hearing what chair powell is saying while stock markets are just hearing that he said " disinflation" a couple of times. lisa s.: the market is fighting

the fed big time. there are some differences in how the equity market is positioning itself. we saw a huge short covering rally saw a low-quality we have seen cyclicals outperforming more defensive stocks. what is more precarious about that is we have almost all of the cyclical length indicators like the index of leading economic indicators, which is -- has really plummeted and yet it is disconnected from this cyclical outperformance. i have heard the reason that people say we understand what should happen but we will look through it. i don't know how far their still all goes to look through it 0 -- cristobal goes --

jonathan: bear with me, there are these things called zero data expiry options at the index level. it is getting a huge amount of attention. he said "you had a 1% bull-bear-bowl sequence yesterday. he said this-- " look at options volumes yesterday. higher rates, of course, this is an under attended consequence -- unintended consequence. people can take 10% of their capital and trade options virtually for free every day." how do you respond to that, lisa? lisa s.: we are in a period of time where there are these

speculative excesses going on. we were chatting before going on air and this issue of excess liquidity and markets, of huge piles of cash, bills sitting on the sidelines, it is there. while chair powell did not want to discuss the realities of the fact that over the last four months financial conditions have massively eased, he has not answered the question. the reality is we are seeing these bizarre perturbations and markets,. thi use of options -- markets, this use of options and this willingness to take really high turnover strategies. to me that is an indication that liquidity is at play, that market stability is going to once again raise its head as an issue that if chair powell does not want to talk about it, some of the governors may start

bringing up. jonathan: the only reason i put up with ferro's he perfectly explained that options insanity we are seeing within one day. you perfectly explained that -- tom: the only reason i put up with ferro is he perfectly explained that options insanity we are seeing within one day. you perfectly explained that. jonathan: lisa, thank you. lisa shalett of morgan stanley. a couple headlines from cbs. the president intends to run in 2024. the next headline says "if biden runs, i will be running with him." we are, waiting for the same thing aren't weight an official -- aren't we, an official announcement? lisa a.: ok.

tom: jon, pass me the surveillance court. jonathan: you have a box full! this is bloomberg. ♪ >> keeping you up-to-date with news from around the world with the first word on lisa mateo. blood mayor zelenskyy is in london where he met with rishi sunak. they discussed expanding military aid. as a lenski is also expect meet with king charles -- zelenskyy is also expected to meet with king charles. the death toll from the earthquakes in turkey and syria has risen above 11,000. thousands more are trapped within buildings that collapsed. president biden's state of the union address foreshadowed what could be his reelection stump

speech. the president highlighted accomplishments on climate and consumer protections in his first two years in the white house, but there was heckling from republicans on social security, medicare the border and other issues. uber posted fourth-quarter revenue that topped estimates. uber'revenue sword's 49% -- huebner -- uber's revenue soared 49%. i'm lisa mateo and this is bloomberg. ♪

three nights, esg... the broker will take your bonds. -diversification, futures, options. fiduciary. leverage. [whispering] -frothy markets. psst. virtual real estate is a lock. ♪ cold hard cash ♪ j.p. morgan wealth management knows the world is full of financial noise. i'm looking at your asset mix and plan. you are right on track. great, thanks. our easy-to-use app and local advisors are here to help you figure out what's right for your investments. j.p. morgan wealth management.

jonathan: futures down half of 1%. yields are still elevated on the front end. it sticks. in the bond market yields come in lower. the 10-year is down to 3.65. tom: we are ripping up the script. we are good at doing that. michael nathanson is with us who wrote a brilliant note on disney a while ago but we are overcome by the news flow. michael, you absolutely nailed

the streaming failure.the experiment would not provide profit. at the wall street journal reports this morning that warner bros. discovery has flat out a blanked. forget about all the happy talk. you have been to those dog and pony's where they say, "we will all merge together." they said they will keep discovery separate. why are they reneging? >> there is no overlap between hbo content and discovery content! there is no overlap. maybe 10% of the market. putting discovery content on hbo? they have a niche service in discovery plus. they do not want to lose it by merging with hbo. that strategy is not going to work. it is such a hodgepodge of content, tom that it is best to

keep it separate. it does not solve any of the problems. there is not big enough -- tom: what is the time urgency for a company with 65% debt, or the time urgency for the many streamers who do not have could call scale? what is the immediacy -- have critical scale? what is the immediacy in 2023? michael: we have labeled this the third act of streaming. as we look at the balance sheets of these companies in a cash generation, it is shocking how little cash they produce, even walt disney. they have to consolidate, slow down content to spend, raise pricing. they have to change the dimension of their business quickly in one or two years.

that is the third act. netflix will emerge victorious because they have come through this not as bad as everyone else's about two. lisa a.: let's talk about -- else is about to. lisa a.: let's talk about walt disney. you said some of their most major on first efforts -- unforced errors was the acquisition of fox. what closures are layoffs are you expecting from bob iger? michael: i am not expecting any numbers today. the real question is they changed their vision of disney plus. you go back to their first investor day, they had a small vision. during the middle of the pandemic year later in december 2020 they gave a more grander

vision. that has to be ramped back. i am expecting a more sober outlook. as part of that revisit of what the opportunity is, i am expecting a reduction in the long-term spending they need to do to get there. to me it was an honest discussion that was not being had about how much you need to spend in streaming and isn't the business big enough to start driving better profitability? not -- lisa a.: just to build on that, for years we are talking that content is king. you're willing to borrow whatever money you need to. now we are seeing one production of a major franchise, whether it is bond, whatever you want to do, and that is the new output. what is the new mantra after "conten is king -- "content is

king"? michael: platform is king! you set me up well for that. i'm not sure content is king anymore. people come in every day to take a look at everything. why content is no longer king is there is too much content. there are too many platforms. right now it is -- tom: there is desperation out there, michael. disney is taking the first episode of mendel lorient. they will put it on cape -- of mandalorian. they will put it on cable. the mandalorian is not wednesday. it is about making hits that jon ferro will watch at night.

michael:michael: you also need to scale. netflix has this constant shooting model where they are putting out every day. they pick their franchises, they let them out slowly. netflix has a model that is hard to replicate. i don't think it is a great model, but balance sheets are too restrictive. a continual -- it is not a model you can get to. lisa a.: how do we get revenue for some of these streaming industries? is it through paying for a subscription or will that start to be more of an advertisement driven model? michael: it will be a bit of a return to what they had. people will go back to putting -- they are about to raise prices,

which happened last month with disney. you have ads here. you are going to see everyone start driving higher and higher revenues. they will use windowing to offload the cost of the content. they will experiment with everything at once. disney has done it. it has to be reversed. jonathan: can we get you in the studio soon? michael: totally! jonathan: we have to make that happen. tom: we will make space. lisa a.: i would love to hear what you have to say about facebook. jonathan: thank you. tom: thank you. lisa a.: he is gone. jonathan: did he run? tom: what he said there, this is really important and frankly more germane than all this economic babble. he is saying the idea that they throw out 10 episodes at once,

the answer is it is done. it is not economically intelligent. jonathan: clearly it is not. you have to roll it out. especially when you can get a one month trial. tom: speaking -- lisa a.: speaking from experience. [laughter] tom: the shark week channel is like six dollars a month. jonathan: do you watch that? what is that? tom: i have a zenith the black-and-white. on the walk up it is tough because buildings are in the way. i moved the antenna around and sometimes i can get yankee baseball. jonathan: just a small tv. tom: this was a bigger one, 12, 14 inches. lisa a.: my father had this and he would watch doctor who on saturday nights. jonathan: i used to sneak

upstairs and tried to watch the end of football. i had to go watch the european games very quietly. the tv was in my parents' room. jonathan: my father was -- tom: my father was sewn anti-tv he took the channel changer -- so anti-tv he took the channel changer off the tv, and put flyers in there and said -- pl iers in there and said, " you cannot touch it, it will electrocute you." jonathan: i had a friend whose died told him, "when the ice cream truck plays music that means the ice cream truck is out of ice cream." lisa a.: [laughter]

tom: bloomberg surveillance, jonathan ferro, lisa abramowicz, and tom keene. how many fed speakers today, lisa? lisa a.: i didn't even count. they are all lining up to give their 2 cents. tom: williams of the new york fed will speak. we will do one better. joining us is william dudley. he is a former new york fed president, proceeding john williams. he writes for bloomberg opinion.

we are proud of that. he has led a cogent debate about how we need to get used to a more sustained inflation and do something about it. bill, what do you make of the cacophony of the last 10 days, an open question to a former official your follow -- your follower is following yuan a couple -- is speaking you in a couple of hours. william: any disagreement between the market and fed will be resolved by the economic data. friday was a good example of that. the market has now repriced to meet what the fed has written down. market is now pricing in a 25 basis point rate hike in march and may.

that is what fed officials have been promising. we are pretty much in alignment now. tom: what is the character of our disinflation? the textbooks you studied at berkeley would say " there is a 60's, 70's pre-vulgar inflation, -there is a korean- pre-volker inflation, there is a korean war inflation. what is dudley -- what does dudley disinflation look like? william: people have either put themselves in the transitory camp are the not transitory camp. we have a bit of both. on the transitory side, we had inflation in the goods side of the sector. that is all unwinding now . we have quite a bit of plate -- pressure in services inflation. we are not going to do that until we have more slack in the

labor market. the labor market is the tightest labor market in memory and that is not consistent with inflation. the fed needs to push wage inflation down. only once they have done that can they confident. lisa a.: what is the role of financial conditions on that process of disinflation? the financial conditions on the way monetary policy gets transmitted to the economy. it is not going to have much of a restraining effect. it is important that the rise in short-term rates impacts prices. we see that in the housing sector. it is the rise in long-term mortgage rates that has cooled off housing. i think paul is not that disturbed by the marginal easing. he knows that if the fed keeps

going, financial conditions will not ease much further and the federal reserve will able to control things. lisa a.: you're saying it does not really concern chair powell because when they enact tighter financial policy, the markets will adjust, stocks will fall, and you will get the same rally you saw in january. that is a different message than the market is taking away. can you explain why you have conviction around the view that he knows eventually they will see the light? william: there is a lot of uncertainty about the economic outlook. powell isn't sure of how much further he has to go. what he does know is that he controls the policy rate. if he needs to slow the economy down more, you can just raise rates higher or he can keep them higher longer.

that will tighten financial conditions. the fed is in control here. financial markets can think whatever they want. at the end the fed will write the script. tom: there is a guy on san francisco a number of years ago who had stars in his eyes and developed r, then developed r starred, now we are talking about r starred starred. explain r starred and its importance in the can cough any we are living in -- the cacophony we are living in now. william: you have to have some notion of what is neutral. how high should the nominal fed fund rate be to have a neutral monetary policy? r starred is an estimation of what the neutral rate is after

adjusting for inflation. this morning it was 2% prior to the grid financial crisis. you have to have an idea of where neutral is. tom: if that is the case, do we have a confidence in our meeting to meeting monetary theory given the effective technology, the effective demographics, the effective larger factors that he a levy a blend chart is writing about now, do we have -- olivia blend hard is writing about now -- william: the federal reserve is trying to push monetary policy, saying that there confident. i don't know how -- they may not know how restrictive but they are confident they are in restrictive territory. as long as they are in restrictive territory, that will slow the economy down. if r starred, is a lot higher

the economy will not slow and the fed will have to do more. how tight does monetary policy have to be? how long does the federal reserve have to keep it there? lisa a.: that dovetails into friday's market report. tom: bill nailed that. lisa a.: it raise the question of whether it was material enough to shift your view of how high r sta starred -- r starred has to be. william: the fed's game plan is to go to what they think is restrictive and keep it there as long as it takes. i think it is more likely that they extend the timing of how long monetary policy will be restrictive if the economies stays strong, --

we are not there yet. they will hang out there for a while. if the economy stays strong after they get to 5% -- lisa a.: you used to talk about the improbability of a soft landing. now that is the base case. do you push back or do you think it looks more and more likely that we could get some immaculate disinflation or a soft landing? william: it is true that we will not go into recession any time soon. the economy has to much forward momentum. they are looking for 2.1% growth in the first quarter. before it was less than 1%. the economy has a lot of momentum. recession is probably in the medium-term. the fed has to generate slack in the labor market.

every time the fed has pushed down by half a percentage point, we end up with a recession. lisa a.: do think when we look back from a historical perspective, we can write the bug on zero rate policies as having ended without any financial accident that was material? william: all of the things we did to fix the financial system after the great financial crisis was good. i think the financial system is stronger now. that is why the federal reserve is in control of the process. once the fed achieves its objective they can cut rates. if the economy turns out weaker than the fed wants, the fed can cure that pretty quickly. there will be plenty of room for the fed to stimulate the economy. the risk of staying too tight to long is less than not doing

enough because the -- tom: hugely valuable. dr. dudley, thank you very much. this dovetails beautifully. he has a phd from berkeley. in the next 45 minutes i will suggest that the undergraduate from berkeley did more than good there. michael mckee joins us with a brief here. how r starred is our morning here? the set of fed speakers and particularly what john williams will say seems important. michael: he is the president of the new york fed, which makes him the vice-chairman of the open market committee. by tradition, the vice chair does not descend from the chairman. -- dissent from the chairman. what williams says -- we have

had powell speak first. i would not expect a lot of deviation from john williams. lisa a.: how much does tone matter though? how much did jay powell sound a hawkish message with a dove tone that markets have thrown away? michael: i asked you yesterday while we are on air or they should have said, because that is the hard part. they are saying what they mean but the tone has not been strong enough. williams is not someone who will come out and plow the table. i think he will probably push the idea that the fed is not done yet, but i don't know he will say to the markets, "you are wrong." tom: give us a view of claims tomorrow. i i'm not used to under 200,000.

is it a fully employed america? william: it is a fully employed america by any measure. the people who are just changing jobs on a regular basis are very low. what has been happening with the people who are getting laid off? the announcements have been made by the layoffs have not come yet. it appears a number of people are getting jobs at a fairly quick rate, replacement jobs. tom: lisa, that was phenomenal with bill dudley. lisa a.: he was saying also the reason why jay powell did not push against markets more was because they will come around when they see what they do. that is interesting. tom: we will continue. stay with us. this is bloomberg. ♪ lisa m.: keeping you up-to-date with news from around the world, this is first word. i'm lisa mateo.

turkey was struck by two powerful earthquakes on monday. soldiers are helping with search and rescue efforts as the death toll passes 11,000. president biden talked to the leader of china in his state of the union address. the president said they be a world leader who would replace xi jinping. house republicans are opening their investigation into hunter biden and the biden family finances. today they will ask former twitter executives about their allegedly cooperation with the fbi to squash the story of the younger biden's laptop. fans of -- shares of manchester united are soaring in new york. they are preparing to make a bid for the english premier league

in a couple of days. manchester united has been the subject of speculation, following news that its u.s. owners were considering a sale. it lebron james has broken the leak's shot record. -- the league's shot record. tickets for the game sold for as much as $80,000 in the secondary market. global news, powered by journalists and analysts in -- i'm lisa mateo and this is bloomberg. ♪ welcome to a new era of flight.

three nights, esg... the broker will take your bonds. -diversification, futures, options. fiduciary. leverage. [whispering] -frothy markets. psst. virtual real estate is a lock. ♪ cold hard cash ♪ j.p. morgan wealth management knows the world is full of financial noise. i'm looking at your asset mix and plan. you are right on track. great, thanks. our easy-to-use app and local advisors are here to help you figure out what's right for your investments. j.p. morgan wealth management.

[applause] tom: the festivities last night led by the president of the united states, mr. biden of course vice president for barack obama. how do these speeches get written? by committee? lisa a.: we heard about that, right? brian deese or give a nod to the idea that it -- tom: he is a democrat.

he worked for ted kennedy. cody keenan joins us now, from merck chief white house speechwriter for president obama. cody, thrilled to have you here for republicans and democrats how many people are in the room when you write a speech? cody: ideally one. tom: what is the reality? cody: the reality is that brian deese was the best person to work with. there are a lot of cooks in the kitchen. you have people sneaking off to bathrooms to try and get their peace in their. -- their piece in there. tom: it harks back to lincoln. what i remember is a better history, a better life.

does joe biden have on equivalency, phrasing that harkens back to what you did for president obama? cody: the two have very different styles. joe -- i'm sorry, president biden -- tom: you can call him joe. cody: i liked that he used " blue-collar." the best parts of the speech were when he was talking about a son who had a father who fell on hard times, as a father who has lost a child. lisa a.: as a speechwriter, do you love it or hate it when they go off script? cody: both. we work so hard. when they go off script, you hold on real tight.

last night i thought it worked to the president's advantage. lisa a.: people are talking about whether he will run in 2024. there were comments from, harris. she said if he ran, she would run in with him. what is the calculus that people are not hearing about when it comes to that? cody: back in 2010, 2011, there were democrats saying "maybe we should run someone other than president obama?" last night, his energy level, there was this sheepish appendage -- he went longer than any of obama's addresses with more energy at 10:00 p.m.. tom: i felt the same thing about

the energy. jonathan: i want you to give some advice to our republican viewers and listeners. let's assume there is some new republican voice out there. how do republicans get the -- find the next language that conveys their message? cody: it is simple. i was watching the response from governor sanders and i think the republican problem is they can no longer give a speech to an audience outside of the fox news bubble. they no longer speak to middle america. most people tuning in do not know what she is talking about. they can -- lisa a.: we were talking about this earlier. it becomes difficult because when media talks to a democrat, republicans close their ears, are when the republican talks -- the media talks to a republican,

the democrats shut their ears. what is the path to a -- michael: we would -- cody: we would always be criticized for including a big section on the end about unity and politics. you just have to keep working on it. tom: the night your mentor ted kennedy, limping, got up on stage and introduced a guy named kerry, they were stunned over that john kerry victory. are we had a seachange now within both parties where we will be as stunned as we were when ted kennedy introduced john kerry? cody: i think both parties are going through big, generational shifts. the backbencher shouting last night -- there is this fame seeking you can get on social

media where it is less about governing. tom: did you read strunk and white? cody: a long time ago. i worked for senator and kennedy. i fell into the speechwriting. tom: i'm asking for my kids. they cannot write a dam thing. cody: reading is the best way to become a better writer. tom: that sounds like 'bramo. lisa a.: i have multiple copies of strunk and white. tom: cody keenan was a speechwriter for a senator and a president of the past. we are looking at markets that are really extraordinary. futures -20. the drop was as john mentioned the way the markets recovered yesterday. lisa a.: does the melt up and when the fed raises rates again

in march, i get seems probable -- like it seems probable? we will keep an eye on john williams. tom: i would go back to the adjustments over the weekend, which is all of a sudden, to borrow a phrase off of what cody was saying, the republicans calling it morning in america, i'm sorry three point 1% gdp for the year-end was an extraordinary statistic. lisa a.: there is a perversity to this discussion and it is deeply uncomfortable to have a discussion about how bad it is for there to be such an employed america. it is a good thing for people to be getting salary increases. it becomes complicated when we look at what is next. it has never been more complicated to see. tom: delta airlines, ed bastian

taking control, saying pilots get 8.5% over four years. 5%, off of the article that bloomberg reported on. lisa a.: 5% all nonunion workers, all workers get a 5% raise this year following a 4% raise last year. john's is this all the time. you cannot fire people you could not hire. when does this shift? do you see any demand to destruction in airline tickets? tom: i have been more optimistic on the experiment than a lot of these people. i will go back to jim glassman was may be more prescient than anyone i know. in all of these conversations he says, " they worry about this,

they worry about that, but for themselves it is 'how do i find employees?'" what are we going to do with a 5% one year takeover? we are not there yet. the short term paper market is to me incredibly prescient right now. lisa a.: john raised this question of the options trading, the spinoff of the cash that you get from investing in short-term debt. does this have a disinflationary aspect, or does it for the moment encourage -- tom: i'm not willing to say it is disinflationary. i'm willing to say that it is a conversation for another time and place. i need wider lapels. we thank our team for great agility today on the news flow, particularly michael nathanson.

we will monitor that announcement by the new york fed. stay with us. this is bloomberg surveillance.

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we will bring you those comments. equity futures down .5%. the countdown to the open starts right now. >> everything you need to get set for the start of u.s. trading, this is bloomberg: at the open with jonathan ferro. ♪ jonathan: live from new york, jay