>> six to nine months from now we will put the term disinflation on the shelf with the terms transitory. >> a lot of people are looking at 2023 as a transition year. >> we have a 50-50 chance of a soft landing versus a mild recession. >> if we have a recession i do not think it will be very bad or very long but my base case is we dodge it altogether. >> this is bloomberg surveillance with tom keene, jonathan ferro, and lisa abramowicz. jonathan: i almost stayed in bed this morning.

tom: is a snooze fest but we need to make it productive. there is a lot going on beneath the surface. our job -- stay with us on this exciting friday. jonathan: usually save that peptalk for the moment before we, the air. i am jonathan ferro. if you want to move this morning , look to the commodity market. crude is up 8.5%. the russians are preparing to cut output and as we understand it, according to delegates of opec-plus they will not boost supply in reaction to that russian cut. a decent rally in crude. tom: it has been a story all week. brent crude up to $86.23. it will not give way. we are on our way to $90. jonathan: you have to reframe the inflation report next week.

lisa: this is one of the big questions, especially if that will torpedo equity momentum. on this move in oil, what strikes me is how much the barrels have not been taken off the market from russia. all they are doing is losing some of the profits but not necessarily selling less. if that gets taken off to a get a changed narrative around the oil and gas? jonathan: jeff currie pushing out the triple digit crude call to year end. lisa: yes and a lot of people are getting burnt or get it again by that shift narrative in oil prices. jonathan: can you bring up the chart of the lift in the premarket. brutal. the lift is down 33%. -- lyft is down 33%. we will do a full round trip the time we opened. if we hold these levels we will be back to the 10.

tom: it is scale, scale. this is one of the places where there is a duopoly. we saw this with the uber success and lift code not. by one publication it is 70% uber. i think it is more than that. jonathan: is it a winner take all situation? we used to talk about netflix that way. is that where we are with this industry? lisa: this is more extreme than a netflix scenario. to break in they have to cut some of the peas which means their margins will get cannibalized which means they cannot invest in innovation that is necessary to keep taking market share and this is the reason the shares are dropping the most. tom: it will not be theory friday. we will dive into thinking about this over the weekend and wednesdays inflation report. i will make it as simple as i can. on the internet and your

question about is it a survivor of one is the landmark essays pushing back 12 or 13 years ago it says in technology using ethernet mathematics it is a survivor of one like amazon would be one example. jonathan: equity futures down .5% on the s&p. no real drama here. the 10 year close to 3.70. the two year through 4.50. it is like oil nudging up, brent crude on its way to 87. there you are at 4.51%. it is boring as we wait for inflation but markets are moving. jonathan: the spread between the two year versus the 10 year, the inversion of the curve, right now -81. what were we yesterday? lisa: -85.

the deepest inversion we have seen since the early 1980's. when you say there is no drama there is the university of michigan sentiment survey. i am focused on the reading. how much does it rebound or not in tandem with lower gasoline prices? i am also curious because we are expecting a higher year ahead outlook for inflation. this will be interesting, have we reach this feeling, peak immaculate disinflation narrative in markets. today we also have the european council meeting in brussels. they are discussing ukraine and the european response. there was drama overnight. they are also talking about the response to the u.s. inflation reduction act. i minted did to see whether there is -- i am interested to see whether there is any cohesion on their side or this will end up being a point of tension. today there is a bunch of fed speak. fed governor chris waller and

philadelphia fed president patrick waller. do they double down on the groupthink? do they push back? what kind of narrative to they give going into the tuesday report which will be a blockbuster one, not only for cpi, but we get a read on who the potential next leader is for the bank of japan. jonathan: let's talk about that potential next leader, professor and former bank of japan leader. i went to mizuho. they say he is a cautious person so he will not take away yield curve control all at once. dropping why sisi will likely be his -- dropping ycc will likely be his first -- tom: they are data dependent but different data-dependent than we are. i've been in the offices of the bank of japan. there is not bloomberg sitting on the desk.

there is a quiet, and the quiet is the slow-motion movement they work at. that is a cultural issue. jonathan: the government is heavily involved. tom: some form of theoretical communism we learned in school without marxist theory. it is a communal approach to economics. jonathan: we learned recently that when they were pulling back on ycc, apparently that meeting was stopped so the government could have upon her station. the government official about what was going on. it makes you wonder, the kind of process they went through to choose who would lead the boj and what it means for policy going forward. lisa: are collins at bloomberg opinion put it well. we are talking about the potential hawkish nest -- the potential hawkishness of the new governor. any hawk in japan is uber dovish

anywhere else. jonathan: we have some yen strength. let's get to elsa, can we get your thoughts on the boj reports that have come through this morning? elsa: it has been interesting trade for many since the band was whited in december. it feels like people have over traded a little bit and keep getting excited about who it might be, what that might lead to in terms of movement. the bank of japan move slowly and i think traders are weighing on their options. we still have the over banking of the move. now pretty much close to flat. tom: your academics and bind is simple. there is disinflation, there is deflation, and then there is

cosmic undefined ability of reflation. mr. kuroda is doing the ultimate reflation experiment. how is it going? elsa: honestly speaking, it has been a long time and it is hard to see tangible effects. there is inflation in japan but we have seen across the world global supply chain issues and commodity price effects and what we see when that fades away is the underlying core inflationary dynamic which is stronger in some countries than it is in other. i find it hard to imagine a world where the u.s. is in disinflation and japan is seeing aggressive inflation that would require much higher rates. lisa: you are pushing back against the idea that next tuesday will be explosive because we get cpi and we get the bank of japan nominate and notes overnight are saying this is going to be explosive, especially for the pain trade people positioned in different

ways. you disagree with that? elsa: cpi will be interesting. a huge focus on cpi in the u.s. at the moment. the bank of japan governor less so. for me the big change is not what is happening in japan but the rest of the world. the increase in hedging costs for japanese investors, that has not gone away. if the fed will be cutting the back half of the year it will still be very expensive. that is the sea change, not the ycc. tom: how does your world change if we now have a world where money costs something? how does that change the foreign-exchange world where you can profit from it? elsa: i think that is a great question. we are in an environment where it seems to be falling across the board, you see it in equity market and fixed income markets. more mixed in affects. it is an environment conducive

to considering not just rate dynamics but also the level of rates. in that context it is difficult to imagine we will see the dollar collapse like a lot of people are forecasting if it remains the highest in g10. it does not matter when cash costs something. you earn something by holding onto it. it does mean that by holding onto a short dollar position is not going to pay off. jonathan: i want to finish on the euro and what is taking place in energy today with crude rallying. there is a piece in the financial times. "putin has lost the energy war." is that your working assumption for 2023? elsa: that is interesting because you mentioned the inflation reduction act in one of the discussions they are having at the council today is what the response will be.

structurally cheap gas europe used to get is no longer there. that might not benefit vladimir putin but it will certainly benefit the u.s. in relative terms. going forward, this is not a three month a six-month trade but on a two to three year horizon there are big incentives for european companies to be investing in the u.s.. jonathan: thank you. elsa lignos of rbc. equity futures a little bit softer. the curve, two versus 10, the deepest inversion going back to 1981. as lisa pointed out earlier, the two year versus the 10 year just off the levels of yesterday. from -85 to 81. tom: an interesting take to say the least. i will go to oil. julian lee coming up. jonathan: very close to $80 on wti. that conversation is up next.

leigh-ann: a surprise from the bank of japan. there are reports that the prime minister -- in april that led to a jump in the yen. he is a professor and former boj board member. ueda has expressed caution on raising interest rates prematurely. in turkey, three survivors were pulled from the rubble today more than 100 hours after they were trapped by killer earthquakes. rescuers had worked for more than three straight days. the death toll in turkey and syria has climbed to 22,000. russia has launched a number of cruise missile attacks on ukraine. ukraine says the targets were critical infrastructure in several cities. meanwhile olaf scholz has asked leaders to deliver german tanks

to ukraine as promised. the goal is to have 80 tanks by the end of march. more revelations about the chinese balloon shot down over the coast of south carolina. the biden administration is presenting evidence the balloon was capable of collected communication signals and carried an array of surveillance equipment. bloomberg has learned congress has been told some of the components had english language written on them. global news powered by more than 2700 journalists and analysts in over 120 countries. i am leigh-ann gerrans and this is bloomberg. ♪ advancing flight for future generations. ♪ welcome to a new era of flight.

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i heard about the payroll tax refund that allowed us to keep the people that have been here taking care of us. learn more at getrefunds.com. >> million barrels from china,

million perils less from the spr. i think the market is too focused on russia. the other does cope and take us. jonathan: crude rallying more than 2% on brent. $86 a barrel. the latest news that russia said we will cut or your output by 500,000 barrels a day. this is the follow-through we expected. the threat to retaliate against western sanctions. here it is. opec-plus, how will the rest of opec-plus respond to the output cut according to delegates -- according to delegates, they will not boost supply in reaction to that russian cut. lisa: which is what russia wants. the point is if we are not making as much money from what we are exporting, if we cut our production we will make the same amount by exporting last because the prices will rise. jonathan: crude has been rallying most of this week.

up 8.8%. i think we are on course for the biggest weekly gain of the week so far. tom: pre-pandemic $60 a barrel. then lisa had two drums in her living room. the important point is the persistency from $20 a barrel to 120 was tangible, there was a trend. we go back to $70 a barrel, and now what? jonathan: we are having a supply-side conversation and i thought we would be having a demand-side conversation. this is unhelpful with china coming back online and we're all waiting for the demand to show up. tom: a nice precursor to julian lee in london. truly an expert on the geopolitics and the mathematics and the microeconomics of oil. john says there is a supply-side dynamic and amrita sen set a

demand-side dynamic. which is more predominant right now into 2023? julian: the immediate impact is from the supply-side. we have a number of things that have happened in the last few days that have helped support this rally this week. the terrible earthquakes in turkey have had an impact. they have effectively knocked out the exports from azerbaijan, about 600,000 barrels a day. we do not know how long those will be off the market for investigations going on about potential damage to the export terminal. we have had what looks to be a brief outage of production from kazakhstan that also feeds into the mediterranean markets. that has tightened that a little

bit. we have had a production outage in the north sea, the biggest field there is underperforming. as amrita said we are seeing the end of sales from the strategic petroleum reserve and it is noticeable that if you look at the u.s. weekly figures that the u.s. has gone from being a net exporter of oil as it was for most of last year to being a net importer if you combine crude and refined products together. then we have the opening up of china, the boost to aviation demand i was talking about in the newsletter. you have to account for some of the demand forecasts that have been made elsewhere on the back of fuel switching from natural gas to oil. warm weather in europe means that has not happened in quite the same extent.

that is offsetting that. tom: how does opec-plus behave differently if we leap over $90? how does their behavior change? julian: i am not sure it does change very much. they have clearly -- over the last few months they have been worried about the downside. they have been worried about brent around 80 and potentially below. they have been very cautious to protect themselves against the downside. if you look at when oil got up to $120 last year, this was a period of time where they had been lagging behind demand growth with their output increases. the group as a whole -- as it still is -- was failing to pump as much as their targets allowed because many countries could

not. even then they were reluctant to allow those countries, saudi arabia, the emirates, to make up the shortfall from others. they were clearly much more worried about prices slipping below $80 than they were about them going above $100. that mindset continues. lisa: which raises this issue. why have none of the warnings come to pass. why hasn't china coming back online, and economy not as bad as people expected, has not contracted the way people thought, then you are also getting supply reductions. wired prices higher? -- why aren't prices higher? julian: partly it is the market is better supplied than it was. we have not had the dire economic forecasts come to pass but there has been a significant reduction in demand, particularly in europe.

we have had a relatively mild winter in europe so far, which means the pull on natural gas has not been as big as people feared it would be and therefore the need to switch away from natural gas and into burning oil has not materialized in the weight many people feared it would this winter. that has helped to keep demand in check to some extent, and plus in china, we have had the opening. in many ways the chinese economy or chinese oil demand is structurally quite different to oil demand in the u.s. or in europe, which is very focused on the transport sector. in china it is much less so. transport accounts for a smaller proportion of the country's oil demand. as you open cities up and allow

people to travel, that does not have quite the impact the same moves would have had if it happened in the united states. chinese industrial demand for energy and for oil within that did not take the same hit that transportation command did. jonathan: julian, always a clinic with you. thank you. brent up 2.5%. wti as well. check out the bond market in europe. the german two year the highest since 2008. compare it to where we were last year. february 10. -33 basis points. that is a 300 basis point move on a german two year it attracts what is happening with the depot rate, which has also seen a 300 basis point move. this is just tracking the ecb. tom: why is it breaking out?

it went up a couple of days ago and pulled back and now we are up. jonathan: you can focus on the change in inflation or you can focus on the number. it is a problem. lisa: how much is this stemming from oil prices? if oil prices go up and you have resilience in the economy you have a double whammy. you have an ecb that is forced to combat inflation, but you also have the strength of other components aside from oil that will be driving some of the price increases. it is sort of a toxic -- jonathan: torsten slok started the week well with this. he says are we reintroducing the risks of last year? we have a better growth profile in united states and the reopening of china and maybe the crude issues come back and you get a scare off of the headlines out of russia. lisa: which is the reason why some people are talking about a double-dip recession.

this question around, we have gotten the rally. what happens if people have to reset? jonathan: are number the summer of 2014, i think i was ever here with you. mario draghi took rates into negative territory for the ecb for the first time ever. since then the two year has been below zero. last year, a pop. jonathan: the distinction with the ecb -- tom: the distinction with the ecb is they set out a calendar. the fed does not do that. jonathan: crude rallying. live from new york, this is bloomberg. ♪

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jonathan: a slow start for the equity market. equities heading south on the s&p 500, negative .5% .6%. through thursday the s&p -1.3%. the nasdaq down 1.2% as yields pickup worldwide. in the u.s., yields higher from four to five basis points. through 4.50. in germany, a similar story. the highest yields on the two year back to 2008, and maybe you can blame crude.

crude rallying part this week, just short of 80. up more than 2%. russia pledging to cut output by 500,000 barrels next month and according to delicates we have spoken to at bloomberg, opec-plus not ready to offset the cuts. tom: i will go out to brent crude. $87 a barrel. jonathan: important for the inflation story next week. earlier this morning we had inflation out of china rising 2.1% just as china reopens. william lee says this about china. "china's post-covid recovery is the heart of upside risk to consensus forecast of global inflation and growth. however, china's recovery may not spur of global growth rebound by as its past expansions." tom: it is friday and we are framing on finance and economics out to the inflation report on wednesday.

this is a really important conversation to get you ready for thinking on the weekend of where we are going in 2023. william lee's chief economist at the milken institute. a tour of duty at citigroup as well. we are thrilled he could join us this morning. your opinion is courageous, narrow, and controversial. you think wall street is not about the china group three they will come back and we will -- the china groupthink they will come back and we will boom. you doubt the china gdp of 5% or 6%? william: a lot of the western consensus is looking towards high numbers of china growth rate. people are overestimating how hard it is to get supply-side back online and the fact the policy in china is to emphasize domestic demand and domestic consumption. if people are expecting the export engine of china to be

reviving again and pushing up the commodity prices, i think that is the wrong place to look. look to tourists from china going out. we talked about the two america's. right now there are three china's. the rising middle class will be in bait -- will be engaging in some of the behavior. the bulk of the population is caught up in their wealth being -- and their household income is in the doldrums because the youth unemployment rate is so high. tom: when i go to china i go deep into china. i want to go into the way you think about the domestic politics and that the wall street groupthink around china is wrapped around shanghai and hong kong and beijing and you have the courage to go across the country. what is the distinction of central and western china? bill: one of the things people

miss is the emphasis by xi jinping on wanting to spread growth. a study of cities in china has pointed to a budding innovation center out west. and original growth center that was supposed to be at the heart of the belt and wrote strategy. the strategy to put growth out west is still there but western investors are ignoring that. something went to keep in mind is china is more than the hotels in hong kong and beijing. jonathan: you tell him. lisa: public service announcement. [laughter] tom: bill has been telling me that for years. jonathan: you know the function on the bloomberg, type in a country, put in china. the consensus forecast is 5.1%. looking up to 2024 the message

seems to be get comfortable with 5%. can you put numbers on your own forecast as you push back against that consensus 5%? bill: i think the audience will say who cares about bill lee's forecast so let me go to the imf. the fact that the imf is looking at two handles and three handles out five years on china's growth tells you something about the reality of china. the imf never deviates from consensus. that is good evidence to state we are not going to have the kind of high growth rates we had before because china's productivity and labor growth rates are not there to support the 5% or 6% growth rates we see. lisa: there are two points. there is the headline number that might be juiced by stimulus or the chinese government as well as different types of regulatory policies. then there is the stimulative

effect on the rest of the global economy. can it be possible for china to get headline numbers they publish at 5% while not having a stimulative effect on other economies because of the domestic focus of all of these programs. lisa: bingo -- bill: bingo. i can guarantee it the next set of numbers out of the china gdp will have spectacular numbers, possibly even sevens because the rebound effect be amplified by the way the numbers have been poked by forecasters. the reality is china's policy is one of emphasizing domestic demand, emphasizing investment towards building domestic champions, companies that will be helping china's domestic economy. the focus on consumption means we will not see spikes in commodity prices, we'll be seeing spikes in airline tickets and travel destinations and hotels and that service sector constraint is something that is still severe in china because it

has not been built up as much as it has in the west. going forward we should see inflation numbers rise but in different areas. even the current numbers we are citing now, to present inflation, most of that was food. if we look at the core inflation, it is still 1%. where is the spike we are supposed to see from the rebound? not here yet. lisa: in terms of ramifications for europe when it comes to crude prices -- it has a negative implication in terms of some of the growth priced into germany on the heels of china's reopening. how misplaced or some of those hopes? bill: i think a lot are very misplaced because the policy of china xi jinping announced was we want to build domestic demand and domestic consumption. that is not the kind of stuff that makes for a lot of imports of bmw's, except for the try

china notion, and i have talked about that the very ritual always be importing luxury goods and bmw's and mercedes will be part of that story. the bulk of the chinese population is struggling post-covid and post the property market collapse. unless reforms are put in place to restore confidence chinese people have, we are not going to see the consumption burst sustained we saw in the past. that is something that the western forecasters have not put in place yet. jonathan: china's leadership does not like being embarrassed. this week a lot of people feel like they have been embarrassed. what are the consequences? bill: the balloon industry will get a deflating story. one of the things xi jinping has to demonstrate his he has control over the government. if you have a couple of stray renegades putting out foreign

policy affecting moves like netting balloons go all over the world and getting caught doing it, there will be some heads to roll. jonathan: the takeaway over the weekend is none of this happens without the signoff of the leader of the communist party. are you suggesting someone within the party did something on a rogue basis, went and did their own thing without a signoff? bill: i think you overestimate the ability of the center to control the rest of the government. there is always some fool who has decided to be innovative or embarrass the leadership because they are at the leading edge of the revolt against the party leadership. either way, i think one of those stories will be acted upon. we have had scenarios where the central leadership has been challenged by leaders, like one

who was arrested for corruption and taken out of the picture. what we will see is a story that will evolve where the person or persons behind the balloon story , we will never know and will never hear of them again. jonathan: it was the rogue weatherman who did this. tom: this is serious stuff. we talked to the admiral about this. to bill lee's point -- there is this juvenile idea that everything starts behind the red doors in beijing. to a person, william lee, elizabeth economy, jonathan spence says that is not the way it works. jonathan: bill, wonderful as always. bill lee of the milken institute. there is the takeaway over the weekend that nothing happens without xi's signoff. is that the case this time? lisa: it is damp if you do, damp

if you do not. -- damned if you do, damned if you do not. if you did sign off on it, what was the purpose right before a tony blinken meeting that was supposed to be conciliatory? it is awkward from -- tom: the book of the year or the book of two summers ago, is a phenomenal book come and the heart of it is that these people just disappear. the fiction of 2034 in the back end of the book, people disappear and they do not look like leonardo dicaprio. coming to netflix 2034. jonathan: i am looking forward to that with your other book of the summer. tom: i have three or four of them. jonathan: what was book of the year last year?

tom: linear algebra fourth edition. this is not funny. people disappear. jonathan: it is dreadful. that is what happens under dictatorships. it is no joke. greg staples is coming up at 7:30 eastern time. yields are climbing been equities look challenged in the face of that. equities down on the s&p. on the nasdaq even lower. yields up on the 10 year. lisa: 4.2%. jonathan: 4.20 on the tenure. -- on the 10 year. are you looking at the supply? tom: took a nap and woke me up with a 30 year. jonathan: from new york this is bloomberg. leigh-ann: keeping up-to-date with news from around the world with the first word news, i am

leigh-ann gerrans. ukraine has stepped up its campaign for more weapons from the west. pleasanton volodymyr zelenskyy travel to london, paris, and brussels. the country's deputy prime minister has told bloomberg time is running out. >> more military assistance is needed by the major thing is we need it now. we do not have two months time left because it will be crucial for ukraine's victory. leigh-ann: she also called on the eu to begin the process for ukraine to become a member. the death toll from the earthquakes in turkey and syria has now risen to more than 22,000. experts fear tens of thousands of more people are buried under the rubble. turkish president erdogan is facing mounting criticism over the country's poor construction record and being criticized for the government's response to those complaints. apple is under less pressure than its tech appears to/jobs.

that is because it did hire more efficiently in the first place during the hiring bridge. it added full it -- fewer employees and top of that the company generated far more revenue per new higher than its peers. global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i am leigh-ann gerrans. this is bloomberg. ♪

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and that has been the gasoline on the fire of less bad fundamentals. jonathan: it has been a huge pain trade. that was been late mark weighing in on some of that -- that was ben laidler weighing in on some of this. the s&p still higher on the year. let's check out futures together. down .6% or .7%. take a look at treasuries. maybe yields up by five basis points. blame crude rallying 2%, just short of 80 as russia pledges to cut output by 500,000 barrels a day and opec is not ready to step in and offset that. i would say earnings season is not great in this market was pretty rewarding. rewarding for the beats and the misses. we have numbers from evercore from julian emanuel.

he says the average stock price rose post results, companies beating on the top and bottom line. higher by 1.4% on average versus 1% over the five years average. the double misses on the bottom and top line were lower by 1.4% on average over the last -- over the last five years that number has been 2.9%. not punished for the misses and rewarded for the beats. tom: julian weighing in as more numbers come in. the idea is there has been a multiple expansion. nobody guessed that. lisa: i was also really entranced by this note. he talked about at the same time you have earnings that are downgrades you have rising multiples that have resulted in the lowest equity risk premiums in more than 10 years to give you that point. jonathan: gina martin -- tom:

gina martin adams will join us. as we did with bill lee on china will prepare you for a weekend of thinking about the fractious path forward. i will go to the equally strategist -- to the equity strategist stephen colbert and look at the growthiness that is out there. you are value-based but the growth is winning. give us the future growthiness we can find in a value approach. gina: it has been a confusing market so far this year. in january we saw the unprofitable companies outperform profitable companies. the single strongest month, one of the strongest bonds in the last 20 years. we are in a confusing market. that is already starting to unwind. through the month of february we are starting to see value pick up steam. some of the stocks are hanging on and that is a reflection of the earnings season where they

have been very good at managing investor expectations and also very good at hitting on the nerve of investors which is margins. that explains applies performance -- that explains the price-performance you have been noted. we will see market rationalize over the course of february and into the spring months and we will see some of the froth come out of the market. let's not be too attentive to what happened in january. it is a one-month trend. unprofitable companies will not outperform profitable over the longer run and we want to be more rational in our approach going into the rest of 2023 because there is still uncertainty. jonathan: let's challenge that conclusion. is that the bond market? gina: i think it is mostly the bond market. when we look at the equity market what is clear is what

took the wind out of the sales was clearly the fed meeting. while right after the fed meeting the market has been choppy, it is clear that was a peak point for optimism in the equity market. it is clear that has resulted in some rational movement in yields as well. the equity market and the bond market have moved in close tandem since the equity market low in october. the equity market does take solace from the bond market trend. if the bond market is following the equity market will celebrate that as a signal the fed will ease policy. as much as we criticize the fed they have been relatively successful in navigating the overall climate this year, especially since this meeting -- we criticize the fed not doing as much, but the reality is they are doing something to take the froth out of the equity market and the bond market alike.

they are very clear. policy is not going to take any kind of reprieve until inflation is clearly under some degree of control. lisa: there is a lot to unpack. to build on this idea of taking a signal from the bond market, you think equities have repriced the higher expectations since labor market report last friday. you've seen a market shift in fed fund rates. have markets fully reflected that? gina: i don't think so. when you look at the equity market there a lot of underlying currents in the equity market and it is important to talk about the market and its underlying constituents. the entire market, when you look at the equal weighted s&p 500, it is trending at just 16 times forward earnings. that is not unreasonable. it should be closer to 15 times, but this is getting nitpicky for the equity market. the problem for the equity market are the hydration stocks.

when you look at the entire equity market on a market cap adjusted basis it is trading more like 18 times forward earnings. this is still a concentration of risk in the tech and telecom space that is very vulnerable to interest rate rises. we have been in a period of time over the last year and a half in which the space has been derated relative to the rest of the market. we see a lot of that bubble that developed in the pandemic reflate with rising interest rates. it is not over. it takes a long time. we have been in this period for a very short term where companies have been extremely good at managing investor expectations. they have been able to create a degree of optimism through announced buybacks, cash deployment strategies, also cost cutting and layoffs to help enable investor confidence once again. we will have a lot of give in the space as we see investor expectations come out of this

market. investors need to get more optimistic or more excited about other opportunities in the s&p 500. this has been a 10 year process of getting too overly exuberant on one segment of the market and we are deflating that. it will just take time. jonathan: this was great. as always. gina martin adams of bloomberg intelligence. this equity market in session blows, down .7%. futures a bit softer. treasuries softer. yields are higher. we talked about the 4.20 call from deutsche bank. the chief investment officer over there looking for 4.20 on the 10 year. if you look at where we are in the 10 year and the two year in america, your 10 year now up five basis points to 3.70. on the two year, 3.51.

we are picking up again. a challenge to the lows we saw in the last month. lisa: it feels like there is not the same kind of conviction in terms of buying when things get to a certain level. there is a bigger question around the business consequences of money that cost something. ipo back to lyft and i wonder how much you see more rationalization at a time when money does cost something in the risk of not investing enough is that much greater. jonathan: gone are the days of chasing streaming subscribers. wasn't that part of the story? tom: what a mess. lisa: then you go to the pair backs and this is a different environment. tom: jean it was brilliant mentioning 16 times earning. apple models out consistently at the 25 earnings belief and i just did the math on the s&p 500.

i do not use the dow jones industrial average. on the standard & poor's it is 16.6%. rounded up. amazon, round it up. 70% of the stocks are four stocks. it is the weirdest time. lisa: and how much does that continue to get consolidated because of the lack of free money? there also these potholes and i wonder how much we would be talking about these even if money were not free. i'm thinking about adidas. tom: -- jonathan: that was not lost on me. lisa: do you say adidas? tom: one of our staff came in with the 1970's adidas jacket on. jonathan: so they put a price on youth? lisa: and it is big.

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announcer: from the world of politics to the world of business, balance of power david westin brings you news and insight about politics power players. weekdays on bloomberg >> 6-9 months from now, we are going to put the term disinflation on the shelf of transitory. >> a lot of people are looking at 23 as a transition year. >> you are looking at the data and saying puzzle pieces do not fit together. >> we have a 50-50 chance of a soft landing versus a mild recession. ask if we have a recession, i do not think it will very bad or very long. announcer: this is "bloomberg surveillance" with jonathan

ferro, tom keene and lisa abramowicz. jonathan: thank you for being with us today. we appreciate it. lisa a: he started 6:00 a.m. bison was try to make this better. jonathan: we appreciate it. from new york city. lisa abramowicz, jonathan ferro, tom keene. we have a rally in the commodity market. tom, the two-year is of three basis points and the 10 year is up for. tom: we have a high off, huge negative interest rate from on some months ago but there is a suggestion with the vix would show some tension there. i am going to mention, i do not think we have brought this up, inflation is on wednesday. valentine's day. the next day is retail sales. equal weight? jonathan: this is important. tuesday. tom: tuesday.

i made the reservation -- jonathan: just in case so you don't miss it. tom: they send me emails the rt's by -- are teased by ms. keene. jonathan: equity futures negative. yields are higher. oil is rushing to put out about 500,000 barrels a day. that still is on the crew died of things. right now, crude is $79.74, up by 2%. jonathan: which goes back to what jp morgan said at -- lisa a: which goes back to what jp morgan set in the intro. how much does oil shifty the narrative of disinflation? if oil prices push higher and

you do not get this push in economic momentum from china into europe. jonathan: going to keep pushing the recession call or bring it forward off the back of that? lisa a: i do not know because it is a mishmash of fs that i knew, i would be lying. 10:00 a.m., we are going to hear from the 500 people pulled from the u.s. michigan survey for february. it really does reflect very directly where gasoline prices are in they have been able icing. you have seen the potential for a tick up in the year ahead for inflation because they tend to get very accurate, to the 10th of a percent of projection. jonathan: you are looking at me for a comment. tom: i have always been suspect of this but you look at 5-10 years to inflation expectations are getting and anchored and expert are saying no. jonathan: based on 600 people

they called. tom: may be 522. lisa a: we are also looking at the european council meeting in brussels. they are going to talk about ukraine and there have been a number of developments on that front. we are also watching their response in the collective effort they can make to counter the u.s. inflation reduction act. jon:, you have brought that up a lot. this could be a point of contention between allies and what that means. we also get speaking from chris waller and patrick. are we going to learn anything from them? tom: they are actually both very good. these are not academic monks but guys in the trenches doing legit research and business stuff. jonathan: they have a conference in miami? lisa a: there is one at 12:30 and 2:00. i will check. tom: i wonder what they will talk about. tuesday, the inflation report.

i want you to start larger. the gold rosalie roses. lisa, top ticks $499. it comes in a fancy, gold rate -- vase and they are preserved. jonathan: $500. how many do you get? tom: it is an ample amount. more than a dozen. lisa a: it is like interior decorating. tom: it is for someone who wants lengthier love. jonathan spent hundred $89 and that they died. jonathan: if they could last another year, that would be great. i can put them away and bring back. barbara's joining us right now. we appreciate it. are we pushing out the recession

call? barbara co. we are. we think the fallen interest rates you have seen since october last year of 58 this point in the 10 year treasury easing positions and pushing the recession call. we think it is likely to be somewhere around 2024 rather than the second half of 2023. when a life people are looking for recession, they do not tend to materialize. tom: what is so important here is you have a call that our listeners and viewers in america's operable with which is stay in -- are comfortable with which is stay in america. why do you push against the international angle? and many u.s. investors use china as a proxy like apple. how are they going to reinvent over the coming years? barbara: international developed equities tend to rally against the u.s.. if you take a look over the past few years there has been four

times in substantial outperformance at international versus the u.s.. they tend to last anywhere between 3-6 months and the rally tends to be about 20% and then give it back. it is not to say the trendline cannot be broken at some point but looks like it is starting to stall out. since january 20 19, the u.s. has been outperforming international markets and we think this is a beginning of a reassertion of the u.s. markets. has been lots of outflows going out to european equities in developed international. we do believe the u.s. probably has a better growth dynamic because the fed has been one of the earlier central banks to start which means it is also likely to be one of the earlier central banks of exiting the right monetary policy as well. lisa a: are you pushing back against the idea that the rally in january was a fluke and used to be first? are you actually seeing any

selloffs as an opportunity to buy more? barbara: the rally started in october so the u.s. is up about 50% off its low. international markets are up about 27%. it was very oversold sentiment. we have sent and as we like to watch on the basis that were oversold for a hundred days in the has only happened three other times in our data series that we go back to. you have to appreciate that there was so much pessimism in news priced in, so much concern, that it did not take much in terms of fundamental change of the market for equities to be able to rally violently off that. it cannot continue forever. the easing of financial conditions in the easing we have seen in bond yields helps for a while but you do have someone at the top in terms of multiples. we are using these opportunities that we have reallocated back into the u.s. and sold bond positions after they had done

extremely well, knowing that he will be a tough slog from here. you can easily go up until halfway through this year. part of it is because the inflation comparables, year-over-year, are very easy. we see that starting to term possibly after the june data released in july with the year-over-year comps on inflation are what everybody is worried about this year and become more difficult. tom: that is way too optimistic. [applause] jonathan: you are not one of bramo's friends. lisa a: i enjoy this greatly. as someone who is skeptical of groupthink, there is so much groupthink now, otherwise shall he be a good -- mcfall, -- that there will be a big fall, i appreciate that. jonathan: you're going to love this tom.

the ceo of bank of america said they moved to london and the wife so was the best thing about moving to london echo the wife replied paris. the best thing about 2023 about stocks is bonds. he puts that on this chart. i think michael hanh's tremendous. why don't you come on the show? best start since a portfolio -- best start to a portfolio since 1991. will that continue? barbara: it is coming off the back of a horrible year so there is likely to be done been reversion. you still have the fed acting somewhat aggressively. even though they have had somewhat of more data dependence, it seems they are convinced to raise rates to more times over the worst of this year. the bond market is pricing in a big slowdown in both by will say the inversion on the treasury curve, while it is a fantastic

predictor for recessions, it has a very long time on doing so. anywhere between eight months and 24 months. you can invert on the treasury curve for about eight months at this point. i do not think you will have a big buying opportunity for bonds until you see the passing of the unfavorable comparables was comes around october. jonathan: so you think it gets tricky around the summer, around july time. they believe was in the highly put out said disinflation would go on the shelf with transitory. lisa a: correct. disinflation is the need transitory. jonathan: do you agree? barbara: i think there is a case that a lot of the inflation we had was transitory but chairman powell did not tell us how long that meant. but when you have 15 month long inflation, it is hard to be sustainable at this high as growth continues to slow.

tom: we love your thoughts but the reason we had to on his because voya is in the netherlands. can you get us tickets? barbara: no. [laughter] tom: they have sold -- tickets to this free sale show in the netherlands. jonathan: how much are they? tom: i think they are reasonable. lisa a: it is something like 38. tom: three something thousand tickets to a art show. barbara: talk about something that is rare. there is only less than 40 premieres in the world. jonathan: is that right? [laughter] tom: reinhardt, visit chelsea. barbara: thank you for having me. jonathan: barbara reinhard of

voya investment management. futures lower. this is bloomberg. >> keep you up-to-date with news from around the world. with the first word news, i am leigh-ann gerrans. the prime minister is shade i will nominate someone to take over the central bank of japan. in april. that led to a jump in the yen. ueda has expressed concerns over raising interest rates prematurely. the governor refused to take the job. in turkiye, where rebels were pulled from the rubble more than 100 hours after they were trapped by the killer way. rescuers have worked for more than three straight days and the death toll in turkiye in syria climbed to 22,000. russia launched more missile attacks on ukraine today. ukraine says the targets were nickel infrastructure in several

cities. the german chancellor olaf scholz has asked to deliver tanks to ukraine. they should be there by the end of march. russia is retaliating. they plan to cut oil by march by 100 barrels a day and that is in response to price caps opposed -- imposed by the west. that is equivalent to 5% of january's output. global news, 24 hours a day, on-air and on "bloomberg quicktake", powered by more than 2700 different journalists and analysts in over 120 countries. this is bloomberg. ♪

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>> we are benefiting from a shift of consumer spend from retail, buying stuff for your home, to spend on services. we look at inflation, 70% of our

drivers are seeing inflation play a factor in terms of coming to earn money on our platform. in some ways, inflation may be a tailwind. our performance has been robust and we think it will continue. jonathan: that was the uber ceo. it is the winner this week. let's bank is down. yields are higher. the two-year yield is up three basis points in the 10 year is up four. looking at crude to rally by more than to percent. just short of $80, $.79 67 -- $79.67. they want to cut a hundred 7000 barrels a day next month. according to bloomberg, delegates associated with the cartel say they will not offset the cuts. that is ultimately behind this move. mohamed el-erian and a lot of

people have written in saying thank you for reminding as tom that it was tuesday and not wednesday for valentine's day. he led with that and then told us to look at this. just published this week, in project syndicates, there is more complexity to be had. as inflation gradually eases, the claim that inflation is a result of a supply shop has reemerged. he goes onto say that while the pieces may be comforting, it can encourage dangerous complacency, making an already serious problem harder to solve. tom: dr. mohamed el-erian right on top of the syndicate article really mentions transitory is back in some way. it is not the same as the we have him put five your sicko but michael darter was elian the -- we had a 1.5 years ago but michael darter was elegant on this. -- to get down to the transitory outcome. jonathan: his sled with this

idea that it is not a harley dilly or soft landing no landing at all. he said inflation is going to be sticky and the fed has more work to do and more demand destruction if needed. that is the base case where the slog at apollo. lisa a: this is what i was thinking about last night. it is no landing wonderful for risk assets or not? or is it a transfer of some asset price inflation to an economy that is really transferring the strength of the economy rather than the asset price inflation because you will see margin compressions and also in the corporate community that might not lift to the same degree. tom: we do not have the time now to go into that but it is a really important. why i would suggest is this toxic brew and stew of friday -- it is toxic brew friday. nominal gdp keeps these answers

going. jonathan: can i give you the cheat answer? i do not know what happens but we have to think in relative terms of facing the higher interest rates here. lisa a: that is it. a lot of companies that did the best to start the year will struggle again. it may not be such a clean, direct link from one to the other. jonathan: and needs a lift. let's put it that way. that stock this morning. tom: mandeep singh joins us now. he has been so generous to join us as he writes about the uber lift vein -- the uber/lyft divide. what the timeline to survive if they are going to can against the successful were -- uber? mandeep: last night, it was obvious that insurance is becoming a big problem from them. we did hear that from uber and

that goes to show that being a smaller player in this market, whenever you are running a marketplace, is a big disadvantage. we heard from lyft that they are having issues with supply, insurance spreading over there subscriber base which is 20 million compared to uber which is north of 130 million. those are the sort of things that come into play in terms of how long does this go on. time will tell in terms of just how much growth headwinds they are going to see. tom: a question came up three times this morning. can lift bank taken out by uber or is there a regulatory issues are or do we need a duopoly? mandeep: i think it is unlikely that uber will buy lift -- lift bank -- lift bank -- lyft.

uber diversity would have been much higher if they did not have a frame with their core ridesharing but i think in the case of lyft they need something to be partnering or on the delivery side where it increases the trip frequency and volume because they cannot maintain some five-day do not have the free. right now there frequency is going way below in terms of the network he says. lisa a: so that is basically the take away their. what about investment opportunities for lift bank -- lyft? mandeep: they cannot even think about expanding outside of lyft or the geography. that time has passed and now it is about showing how the business and generate free cash flow.

you are seeing them struggle because the insurance element came out of nowhere and now i like 350 change on the pre-cash flow last quarter. that will continue to be the case so clearly there is an aspect of variable because going higher for these kinds of businesses when you do not have a large subscriber base for ability to manage that. over time, i think they will start doing a lot themselves which could help bring down the cost but if you are a small player, it becomes a big challenge to maintain these aspects when you are running a marketplace. jonathan: that was great and have been phenomenal on these companies this month. we bring up the numbers for lift bank -- lyft. it is worth 11 in the premarket. we ended 2022 at 11.

you had a massive rally, up by 47%, and that has just taken out all the gains in the premarket this morning. lisa a: it gives you a sense of how limited a potential bounce that could be. lyft shares were down by 74% in 2022. this might have been that maybe we overestimated how much the decline was but not necessarily. jonathan: we have had a massive pain trade, haven't we? we have seen massive rallies and index levels like the nasdaq within you get a pushback from the earnings story. this is what -- was talking about at j.p. morgan. he said this is all about positioning, flows and shortcoming. are we going to get the fundamental clarification for the next higher validation? he does not think we are going to get it more broadly. lisa a: which you explain very well about options that kept

being thrown off. but to me, you wonder how much the frost gets perpetuated by higher rate, not necessarily different on the margins before a big economic consequence. tom: within all that is the corporate battle here of cooperation -- corporations adjusting. i think we way under for the size of the big bank of america. these things are giant that we talk about everyday and i do not think we talk enough about the separation of breath and lyft -- of uber and lyft. you have a run rate for uber of 31 million and four lyft, it is 4 million. and yet we talk about them with both. jonathan: that is because uber is international. but in the u.s. we have both. tom: the visceral hatred of uber

in paris is tangible. lisa a: let me guess. we should do some ground research in paris. tom: i do not know how they do that in london because they have cabdrivers. jonathan: for those that have written in the last 20 minutes or so, i did not say the best thing about london was paris. i was quoting someone else. the best thing about paris is london. as put it that way. lisa a: do you think that will get you out the hot seat? jonathan: equity futures down 22. this is bloomberg. ions. ♪ welcome to a new era of flight. i know the markets have gone up and down, but you're right on track to reach your goals. my ameriprise advisor helps me feel confident

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jonathan: equities down in response to higher yield. this is the picture of the s&p. this is "bloomberg surveillance" and we are down 0.5 percent on the s&p, down almost zero point and read. for the bond market, yields higher. the two-year up and back to 4.51. think about where we were last friday morning at around 40 basis points lower. it has been quite a move. and moving crude as well. very close to $80. brent crude through 86 on the

back of this announcement from russia that they are ready to cut output by 500,000 barrels a day from next month. the important response we have seen this morning which speaks to the rally, not just today but through this week, is the opec-plus will office -- will not offset it. lisa a: they may actually encourage the lack of supply added because they see the dearth of demand or because they like prices to be higher. it will really affect the market and where it places this. jonathan: a lot higher this week. more than 8% off the week so far. he also pointed to the tragic events in turkiye that may be disrupting the supply as well. lisa a: it has been a horrible story. you just wonder why the buildings were not better structured reagan i do not understand. tom: i look at the aftershocks every morning and this is the first time i can say it was almost a quiet evening from the northeastern mediterranean and up the broader valley.

there was like five aftershocks. jonathan: it has been a shock for everyone and there were thoughts are that the people turkiye and everyone affected by it. lisa a: we were talking about lyft and uber to give you a sense of where we have come and where we are going. the diversions between the names have been widening dramatically. lyft shares down 31-32%. uber down 3% so much less but take a look at what they have done here today. lyft was down last year 71% and uber was down 40%. year-to-date, lyft is up 47% for today's decline takes out most of that. uber was up 45%. you are going to end up with lyft almost flat on the year, but may be up 10%. that is marginal based on how these have been fluctuating but

we were apple store retain 30%. the gap is widening. jonathan: we have been trying to figure out all week. do you google more? most people google. tom was a showstopper yesterday. you are telling me you use being ? lisa a: people are stealth using bing. jonathan: how? lisa a: on personal computers, that is the default that comes up for search and a lot of microsoft personal computers. people end up using bing and do not realize. jonathan: i just on the desktop you just open google chrome and off he went. lisa a: lisa a: that is what people do but sometimes they get stuck in bing. jonathan: stuck in bing. you have really read into this,

haven't you? isn't that great. more fed speak on tap today. we'll hear from governor wallace and president harker. thomas barkin wrote "it should not be surprised that inflation, while likely passes, is still elevated. that is what makes the case for us to stay the course". an hour after the cpi report, there will be fresh fed speak. tom: then retail sales the following day which i believe is wednesday. i was thinking about that right now. gregory staples roy does right ahead of fixed income with a very transient note that takes us back to a previous speaker, john williams. you say this discussion has serious merit and you really extend out your view because of the mutual rate ministry we have in 2020.

gregory: that is right. a lot of the dialogue is whether the peak rate for the next few months is fog. i think the fed is pushing back against an amplitude higher than that. what they are trying to implement that we heard from waller is they want to emphasize the duration of it. just raise incident to any but how long they will stay is he the peak rate. they are pushing back hard against the concept that they will have to these in july or august and they want to make that true and that is what the market is listening to right now now and that is why you are seeing two years of 4.5%. tom: long-term financials may be three or four months but you are suggesting you have to extend outward you away from the consensus call. what does dws suggest you do if you are extending out the fed dynamics? gregory: what we are looking at is not what we would call terminal peak but terminal

floor. where are we at 2024 and what level does the fed get down to and stop? the mark were talking about around 2%-3% even a unique -- even a week ago, we think is more likely .5% and when you layer in a 7.5% extent, i think may be more like 4% or 4.25%. lisa a: this is what i have seen. every guess coming in and saying duration has been over bit. you are seeing the on the market. we have deutsche bank on the private bank side coming out with a 10 year yield on the treasury. you think it is the same. what is the path to get there? sudden or gradual? gregory: i think a lot is gradual. some is if you are a tenured leverage player, you will be financing that at the sofa rate which will be for .80%.

that is negative carry for a persistent period of time and you can do that if you believe it will go down but if you are looking at several months of holding onto the negative. instrument, it only makes sense if you see the 10-year moving up 4%. lisa a: what does that mean for riskier credit, safer credit or instruments that have been ice off and some stability in yields that may not be stable? gregory: from one perspective, at least we are seeing volatility come in a lot. in 2023, we think it will be around 75 basis points. volatility coming that has always been supportive of risk assets but we have had a very strong rally in january, probably going to far coming from a few things. i think portfolio managers were under arrest at your end and we are seeing more economic strength than we were seeing previously, soon as january. you're also having a pretty decent january. lisa a: there is a philosophical

question when you talk about a terminal rate around 3.5% for a long time of the fate of companies that grew up in a free era of free money. it rationalizes their business model would people still think default rates will remain low. do you think people are overestimating the level of default not necessarily later this year but the year after or after? if interest rates remain where they are expected to be. gregory: i am not sure. member, this was the way things were for much of history until the financial crisis of 2009, 2010. overall, we are sinking credit and that is what we think the economy is doing well so far. any treasurer who did not foresee this recession will have to be taken out and shot because it has been so well advanced. we have been talking recession for six months now and if you have not that's in down the hatches, he should be out of your job frankly. jonathan: let's not take it that

far. [laughter] tom: let's rip of the script right now with staples with this . this is really important. i looked at this one and ask dies like you about issue with -- about issuance. what limits over the cliff right now if a cfo is in the end has to restructure either heavily indebted or lightly indebted -- forget wb which is a train wreck. gregory: prices are still high but they should be taking advantage of the market right now. the high-yield market created 8 billion this week. that was in market shutdown previously. tom: i think our market does not understand the idea that this stuff is issued out. what is the dynamic of issuance on credit dynamic and recent dynamic? gregory: there is an incredible bid.

i think it is a repositioning from being way short year-round but that will in very quickly. jonathan: i too was a market of buying and selling but now they are selling now. who has the leverage in terms of buyers and sellers? gregory: deals come prized 20 or 30 basis through initial hikes and there are five or 10 titer at the break. this is a credit market that is frothy. jonathan: that is a massive change in the last month or so. we started this yields and everyone said let's go, juicy yields. where are we a month later? same story? gregory: people are still looking for the same story. obviously around seven or eight in high-yield but you are the people who were lemmings and could be able to do a 180 degrees turn. jonathan: do you think this speaks to the ones in a generation opportunity to get five and hold onto that for a number of years?

they do not think the high rate regime will last. gregory: for a lot of investors, that is true. and 5% longer term is true. it disappeared a few weeks ago by think it will come back attractive long-term. jonathan: fascinating. thank you. gregory staples of dws group. jonathan: just a couple days ago, the issue was here. debt of apple, 5.1%. microsoft 4.5%. some people would say to a co that is irresponsible. there is no other way. when are we going to start seeing the billion dollar debt issuance this year? jonathan: seriously. gregory: and on billing. sorry to interrupt. tom: it's ok. jonathan: international economist at wells fargo coming up to you looking for that conversation.

bramo, are starting to see this turn? lisa a: if you take a look at some issuers and go back to lower facing industries, some of the cruise liners raises this question of how much are people leveraging of the idea, she put so well, that we are going to go back to the they rate environment we once had? jonathan: still to come, from new york city, the markets, equity futures are negative six handsome 1% -- negative zero. this is bloomberg. >> keeping you up-to-date with news from around the world. with the first word, i am leigh-ann gerrans. ukraine has stepped up its campaign for more weapons from the west president zelenskyy traveled to london, paris and brussels seeking help and the

country's prime minister told bloomberg time was running out. >> for military assistance is needed but the major thing is we need it now. we do not have to have these two months time left because it will be crucial for ukraine's victory. >> she also called on the eu to begin the process for ukraine to become a member. the death toll from the earthquakes in turkiye in syria has now risen to more than 22,000. experts fear tens of thousands more people are buried under the rubble. the turkish president erdogan is facing calls and being criticized for the governor response to the quick -- government response to the quakes. the special counsel investigating donald trump and his allies has subpoenaed pence. former national security adviser has also been subpoenaed. the probe is also looking at the discovery of classified

documents at the trump estate in florida. u.k. avoided a recession last year by the narrowest margin. gross domestic product was not changed in the fourth quarter following 18.1% decline in the is month. the cost of living crisis and -- hit. global news, 24 hours a day, on-air and on "bloomberg quicktake", powered by more than 2700 different journalists and analysts in over 120 countries. i am leigh-ann gerrans, 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. >> china really needs to come to the table and china's lack of willingness to comprehend and participate and to move in a

timely way is really a roadblock. jonathan: let some pretty punchy stuff from janet yellen. live from new york, county down to the opening bell about one hour and 44 minutes away. equity injures negative six -- -0.6%. the year is young in but we have had quite a rally to start 2020. yields were heading lower and now they have rebounded i-4 basis points. the 10 year pushing 3.70. the two-year last week was pushing 3.99 and could not get there but this time it is four-point for. that is a big change we need to get use to. another change going forward is less russian crew. they are looking to cut 500,000 barrels a day. crude is up, near 80. tom: bitcoin traders all began.

i really wonder what is going to happen off of this kraken news. you forced me to watch the world cup and i was looking around at the banners for the up and down and it says crypto.com was supporting the world cup. i looked it up and on their website, they were saying that you can make 8.26%. the fta on the crack in has branding that goes out to 21% return. that is what this is about. guess he was finally acting? to be clear, only for american owners. jonathan: unova you may not see any of the super bowl on monday in commercial breaks, reportedly you will not see what we saw last year which was just crypto after crypto commercial.

and all of those celebrities. what happened? was it matt damon? lisa a: i think you could actually get fined by the fcc for some advertisements of these coins. there has obviously been a big disinflation with respect to crypto assets. tom: -- got death threats of his book the curse of cash. he said when does cash go? the answer is now. jonathan: you know i see a lot now in america? sports betting. tom: we are amateurs compared to you guys. jonathan: we grew up on it. i do not bet on the super bowl because i am not into sports betting but there was a betting office of every corner, probably four. the governors try to do things about it. the fruit machines? they wanted to limit how many fruit machines were in every store because it was problematic. this was years ago but with the

betting firms that was open an other store around the corner so they could get more. lisa a: i was actually pregnant at the time pushed me down to get to the window faster and it highly to the entire experience when i tried to that. that was the last time i went. jonathan:'s you are done with gambling. for you? tom: already done? jonathan: where done. thousand super bowl segment. [laughter] tom: really looking forward to talking to the owner of the boston celtics, rumored to be of interest with a soccer team in england as well. right now making been number -- right now nick joins us right now. it is awarded and acclaimed. let's start with doug telling national economic -- dovetailing for national economics to the dollar. what is it signal right now? >> in the last hour, you mentioned the yields in the u.s.

going up and internationally, we are seeing a whole bunch of right and says rated australia, sweden and mexico. i think we are seeing the last half business which is helping the dollar right now. we really think that is close. we go to the rest of this year, u.s. recession and federal rate because means we do think the dollar will reserve -- resort to softer train. jonathan: that is interesting because a lot of people are trying to think about the risk of higher interest rates. do you pushback against that? >> i think that. we are around a quarter of a point here but when you look at commodity prices slowing growth, i do nothing any of the central banks are that far away. i think the debate is between 5.25, maybe 5.5, but very unlikely. probably between 5% and 5.25%. so you are -- lisa a: so you are

pushing back on the idea that we are going to stay here for longer and rates will not go back down to where they used to be or within 2% of the inflation target? is that correct? >> i am pushing a little bit against that. the peak of inflation was what we saw last year and a lot of entries are starting to see core inflation can down. i think we will not see any further rate increases. if you were to look into the federal reserve, i can believe for example that they will ease later this year or next year but we do think they will be using at the ecb and while say to you, they will move briskly. the higher they go, the harder they fall. so they fear they move up to around 5% or 5.25% and when they start cutting, we think they will move credit -- pretty quickly as well. lisa a: david lieberman said disinflation is the new transitory. it seems like you disagree and think this is more persistent

and has longer legs. what is -- what if the fed is wrong and what is the case that could change your view? >> if the theory is wrong, i think we could see the dollar move a little bit higher or maybe the dollar's depreciation would be relatively slow. it is a case of -- i do think the direction is fairly clear. in one of the things we are seeing is more inflation and one of the we were concerned about last year is falling into recession. our global growth forecast for 2023 has improved. it is not great but it is better than 1.6% that we saw last time. it was very downbeat then. i think inflation does not fall as quickly. yes we can see the dollar not to down as quickly but it is a dangerous thing violence on the idea that this is relatively temporary or transitory. certainly by the end of 2023, we

should see inflation rates lower than that should be comfortable enough for some central banks to be assured. tom: we have been lagarde free today and yet we have seen the german two-year moving to a high free yield. how many degrees of freedom is she losing on a daily basis if she has the choices to make or into april, may, and june. how constrained is the ecb? >> i think they have some flexibility. the interesting thing about their last announcement as they were feeling determined and saying we are moving 50 in march and have to keep going until inflation is under control. i think the financial markets were not that preston we did not see a rise in the euro that day nor significant rise in german bond yields. i think over all, if we are seeing a rise in german bond yields, i do not think that

would be particularly worrisome to ecb president lagarde. again, with respect to that, i know we are talking about being close to a peak but the argument is whether they go 3.25 or get to 3.5. jonathan: my guess is it just builds on the stuff we have from chairman powell the day before when he said the disinflationary process has started and president lagarde said the risk around inflation become more balanced. would you agree with the assessment from president lagarde of the the on the inflation backdrop? >> i would, to some extent. it is probably balance. for a long period of time that we were talking about inflation, it has always been to the upside. they must be pleased with the headline inflation coming down. the one thing that is probably concerning european central bankers and why they are probably not brief about bond

yield rises -- probably not that worried about bond yield rises is inflation adjustment. when you look over the last three months and six months, you are still seeing annualized inflation and core inflation between 3-5%. i think they are comfortable to going to 3.25 or 3.5. jonathan: great to catch up. nick bennenbroek of wells fargo. the 10-year, yields rising by eight basis points. i guess not a major problem for the. lisa a: there has not been massive selloff even though you have seen the move up in 10-year yield in germany. jonathan: the tongue might feel differently because the tenure was not 1.40 -- 10 year was not 1.40 couple years ago. jonathan: paris, then venice,

were also be going on this trip? tom: just venice.

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>> you have basically almost had no funding flows this year. >> markets are going to struggle the next couple of months. >> the credit markets can

withstand a lot of >> the elevated yield. >>i want to be cautious. i do not want to buy into something that is a bubble. >> this is bloomberg surveillance with jonathan ferro , tom keene and lisa abramowicz. tom: good morning. before the super bowl, we are here with you on a most interesting friday. staggering to tuesday in an inflation report. i hope i mailed that right. interesting hour to talk inflation. to join us, owner of the boston celtics. 8:31, set your watch. ferro on liverpool. jonathan: if he does not answer the question, i am going to walk out. cpi estimates, median estimates month over month 0.5. strip out food and energy month over month, 0.3. year-over-year, still holding onto a six handle.

6.2 is the estimate. core, 5.4. tom: important data. back and forth, equity markets a little soft. the vix 29.13. yield dynamics, oil, brent $86 a barrel. what we are going to do quietly, this is the unspoken into the weekend and goes back a few days ago when there were reports of people of goldman sachs maybe wanted to talk to the board. our reports moments ago, bloomberg reports that goldman sachs'last key consumer markets banking higher is out the door. jonathan: wow. tom: he is on retainer or whatever. jonathan: are you suggesting we should be thinking about the pressure building for the lead on goldman sachs? tom: every firm has different pressures. look at the pressures in european banking.

credit suisse particularly. i do not want to cast any aspersions to anyone, but it is in the ether as we go into later february. jonathan: look at the reporting, executives can debate whether they can cut the 2023 loss to $1 billion. that is a tough time for that unit. tom: it is a really tough time. especially with layoffs and bonus cuts. let's get back to the markets. what do? you see to new highs. jonathan: equities down, we can talk about the crude rally close to 79.5. delegates from opec-plus suggesting to us at bloomberg we are offset it. looking to the data next week, i want to pick up on this story from bloomberg opinion. the february jobs report is a bigger report then next month's cpi report. lisa: that goes back to what

robert was saying. the cpi will suggest this disinflation and will have a rapid shift downward. you may get a better than expected cpi print. that does not signal the strength that will come into play in july when we start getting june data. that is the key takeaway to what connor is pointing to. the labor market data has a longer run rate than what we can expect. tom: friday was supposed to be a clumsy friday. we do not need to spend the time on it now. bill lee pushing against consensus on china. you mentioned reinhart, the ing affiliate. he was brilliant pushing against international consensus, she was saying domestic. jonathan: what she is saying is by the time we get to july, we are going to start to have a bigger rate about how sticky this disinflation story is. you can maybe serve the hopes of the fumes left from the disinflationary story into summer. that made the -- may be the view

of some of the bears. what barbara suggested, once you get to july and look at the june cpi report, will it indicate stickiness? lisa: when you look at labor market maker -- market metrics, stocks will respond. jonathan: they will do what they want based on the misses we have seen. we start the year, it is all about earnings. then, it is not all about earnings. lisa: even the bears are saying you can sell around 200. tom: even discussing that is a miracle. jonathan: used to be 3900 was the easy sell. now it is 4000. tom: 4600. jonathan: i do not want to pick on anyone. when you hear someone say it 20% downside and have set the markets 10% higher, it is difficult to take that call and do anything with it. tom: critically, this is for our global audience -- global wall

street audience, the bears are not going to recalibrate until they see the inflation report. jonathan: that is the european equity call from bfa. upside risk to equities. did you really believe there was upside risk to equities? looking forward to that conversation, making sure -- lisa: [laughter] tom: chinese yuan. what is due see in the data? jonathan: cpi elevated in china. we will see if they can respond. equities down by about .6%. tom: it has been a interesting morning. emily rowland joins us, are you going to rewrite this week or are you going to have to to wait until tuesday at 8:31 a.m. to do the rewrite? >> i feel like i should have good valentine's day ponds ready for the inflation print tuesday. it is going to be critical. this week, it feels like there

has been a big shift in the mood music as you would say, tom. we have had a higher bond yield, oil prices rising and most importantly, the dollar strengthening. you think about these moves in currency, the dollar has been at the epicenter of every move in the markets. weaker dollar trend that started in the fourth quarter, really spurring this risk on rally. over the last week, that narrative has changed. we think that is going to be critical to watch. inflation is going to be huge tuesday in terms of the way it impacts bond yields from here. tom: you look at corporate earnings differently. the basic idea of corporate earnings and the resiliency forward, isn't there -- is it there? emily: i want to make a comment on what john set on earnings. it is amazing someone with huge earnings misses world's largest companies hasn't been a huge story. this has been an entirely macro driven market.

when we look at earnings, yeah, -5%, 70% of companies having that reported for the fourth quarter, it is ok. but, some of the themes are critical. revenue growth was the major driver in earnings, it saved the day for earnings in wendy 22. now, we are hearing more about margin pressure, companies dealing with that, the layoffs, buybacks, back in the narrative. we think this is going to be a top environment for companies going forward. costs are elevate, especially the cost of capital having is in a lot. that has yet to be absorbed. topline growth, slowing meaningfully as consumers start to retrench. companies have too much stuff. we think there is going to be a major war on margins in 2020 three. jonathan: what explains the rally year to date and do we risk the narrative of -- another one? emily: it is hard to identify.

you have been talking about europe this morning. i think about it, before higher inflation seemed good for europe because it was better for euro and european businesses. then, we get business on german inflation and that is good for europe. starks are reacting positively either way, it is this odd win win situation that is hard to pin down and there could be a element of a technical rally fishing changes. investors realizing they are short covering, sentiments taken hold, momentum has taken hold. a lot of investors moving to that part of the market. we have not fully embraced that trade admittedly. we have been overweight domestic equities like her previous guest. the reason is, the higher quality market, better earnings, more companies with great balance sheet's, lots of cash on the sheets, a limited need to tap capital markets to grow. that is where we want to be positioned in this environment. lisa: coming into 2023, a lotta

people have been saying this is the year of active management. i wonder about whether this is about avoiding losses or whether this is delivering outside gains and what that tells us about where the sentiment on the risk reward continuum has shifted. emily: it is all about risk management in this environment. it is amazing to see the reemergence of the risk on trade, whether it is small-cap cap equities, cyclical stocks in europe, waking up in the morning and hearing the headlines around theme stocks rallying again. you have got to think, we are doing this again? investors are moving back in this direction of taking risk. there is always a celebration of the fed pivot or this idea that inflation is receding and the fed can see the light at the end of the tunnel to pause. that is emblematic of every cycle. you see this play out again and

again where soft landing hopes get priced in and ultimately they are dashed. unfortunately, we think that is the narrative this time, the lag impact of central bank tightening globally. we would be careful about reaching for the riskier corners or pockets of the market and we would be redeploying assets to high extensive areas. and, bonds. jonathan: do you have a super bowl pick for sunday? emily: i do not, but i have good squares. jonathan: [laughter] emily: i am psyched. jonathan: what does that mean? lisa: the brackets. jonathan: oh. tom: john hancock has two skyscrapers. everybody working at old john hancock has no clue what they are talking about. new john hancock is where the young people like emily are. they do betting pools where there is a sheet of paper and it is squares.

they all vary a little bit, but where are we at the end of the first quarter? they all vary a little bit and you put a small amount of money. emily is popping, what, $1000 per square? jonathan: i think someone in the office did that last year. i think i still owe them $10. emily: it was $100 a square. it is for charity, though. it is for you football. tom: nice compliance save, emily. [laughter] jonathan: $100 a square. tom: we should tell that to tom brady. jonathan: that is not going to work out this year. futures lower. this is bloomberg. ♪ >> keeping you up-to-date with news from around the world with the first word. a surprise at the bank of japan bloomberg has learned the prime

minister will nominate -- to take over the central bank in april. that led to a jump in the yen. he is a professor and former boj boardmember. he has expressed caution over acing interest rates per perm -- maturely. in turkey, three survivors were pulled from the rubble today. more than 100 hours after they were trapped by the killer earthquakes. rescuers had worked for more than three state days. the death toll in turkey and syria has climbed to over 22,000. russia has launched a number of cruise missile attacks on ukraine today. ukraine says targets were critical infrastructure in several cities. germany's chancellor olaf scholz has asked european leaders to deliver german-made tanks to your crane as promised. the goal is to have 80 of the leper to tanks by the end of march. russia is returning --

retaliating. moscow plans to cut production last -- next month by 5000 barrels a day in response to price caps imposed by the west. that is equivalent to about 5% of january's output. the news sent crude oil prices higher. shares of lift plunging, the ride-hailing company says it will prioritize lower prices to attract even more customers. that is a move it expects to shrink future profits. last month, lift cut base prices to keep up with a similar move by uber. global news powered by more than 2700 journalists and analysts. this is bloomberg. ♪

>> the problem you have in the bond market is, you have the fed acting somewhat aggressively. even though they have had somewhat of a more data dependence, it seems to us as

though they are convinced to raise rates at least two more times over the course of this year. jonathan: barbara reinhard was fantastic this morning. essentially making her case, advocating for -- she things you look at a june cpi report and we have a much bigger debate about sticky inflation. tom: it has been the triumph of this friday. thinking forward, that is why mckee is sitting next to me. reinhard was adamant about pushing against the zeitgeist. by america is what she said. jonathan: do you want to take it away, mike? michael: they call people up and ask them what they see. 600 people. jonathan: 600 people. michael: you get some of it toward the end of the month where some of the news has changed. i do not think we see a big change in the michigan numbers. gas line -- gasoline prices went up.

they are heavily affected in that survey. we will see what people's reaction to that is. the inflation numbers probably won't move much because inflation numbers had in coming down. you want to ask about cpi next week, don't you? tate jonathan: taken michael: away. michael:i've got bad news on that score. according to the bloomberg consensus, a fairly large increase in cpi on a month over month basis. half a percent for the month of january after a 110 decline in december. the court is not going to change. .3%, still gaining in the month of january. on top of that, we are changing the waiting of the categories into cpi. they used to do it every 10 years. they moved it to every two years, now they are doing it to everyone year. this will reflect last year's

ratings. overall, they say this is great because it will more accurately affect what we are buying -- reflect what we are buying. it will probably push up the core rate. omar sharif says we could see the core rate two to three basis points higher based on the statistical change, rather than based on inflation. the fed is watching the month over month numbers. jonathan: when should we start looking at year-over-year in mind? michael: the month over month sequential changes what matters to the fed. tom: so is it doves and roses here on valentine's day? lisa: [laughter] michael: have you looked at the prices? jonathan: is it $500 in new york? michael: you are looking at the wrong place. i think that is a little high. [laughter] not that she doesn't deserve it, but that is high. tom: nice save, mike. i want to talk to ellie and come fed speak you live everyday with

the michigan study this morning. i do not like the fives and tens expectations. want to look at the 2028 to 2033 expectations. why do we do that? we have no clue what the expectations are that far. michael: the funny thing is, people have come down a little bit in their numbers they give for what they think inflation is going to be because i think inflation news has been so front and center. for years, people in this survey were answering, it is 7% or 8% and you had to extrapolate out from that what they really meant because people had no idea what inflation is. the expectation for the one year is it goes up to 4%, that is within a margin of error for the fed. they are looking for stability, not a major -- tom: they are looking for anchored. i am reading the minutes this time around. anchored and stability, what does anchored mean and are they becoming unanchored?

michael: anchored means they are not rising out of control. if you are going the other way, you could have it falling a lot. at this point, they are not rising so much reflecting people's feeling that inflation is going to get embedded into the economy. you do not want it in the economy -- embedded in the economy, it is harder to get it out. we are seeing market expectations drop for inflation the next year to two years, and that is good news for the fed. tom: so lisa can report the tuitions cpi is anchored. lisa: is it? tom: they are putting a chain around men and women's legs. lisa: anchoring their financial situation. do i care about used car prices in general? i have been tracking that closely. maybe that is my problem. michael: you are more fun at parties then other people. lisa: [laughter] michael: to know why the cpi is

going down is a nerd thing. a lot of people on wall street are going to look at that because they want to figure out why this is happening and there bets are going one way or another. the average american cares about the year-over-year. lisa: [laughter] jonathan: let me tell you something. not talking about markets or inflation. i need to tell you about used car prices right now. michael: used car prices have gone out -- up a little bit. inflation nerds are worried about this. lisa: that is my point. they were falling for a long time, a couple months people were saying this is the big this inflationary push. now they are going back up because there is not the same supply left over from the pandemic era and lack thereof of people buying those fleets of cars. it matters to people's lives who want to buy cars. michael: here is the thing about inflation and the way we talk about it. the price of a used car is still

going to be significantly lower than it was, but we talk about percentage changes so it goes down to a level, goes up a little bit and there is a pretense -- percentage change that adds to inflation, not the inflation we were seeing when prices were going up and up. jonathan: do your member the scene where the monkeys would be in the boardroom and they pointed at the chart and it was pointing the wrong way and they changed it to make it look better? that is lisa, she grabs the chart and turns it upside down and says, i told you so. lisa: [laughter] that is interesting. they have plateaued. which is interesting, it will support the feeling of position of being anchored. we are seeing prices go up. what happens if gasoline prices go back up? michael: it is inflationary mechanically because a percentage change is higher and it does have more of an effect on people's spending behavior. the bad news is, gasoline prices went up over the month of

january. the good news is, they are going down in february. the numbers for the january cpi, you're going to have a head fake. one thing we can say, natural gas prices have gone down significantly. overall, it is hard to make a production for energy prices in general. oil is up a little bit, gasoline was up a little bit, natural gas is down. tom: the three of us combined know one tent about what you know about the national football league. michael: we were talking about that. it is an interesting super bowl. you've got two good teams. one great quarterback in patrick mahomes. does america really care as much? tom: i do not since -- michael: it is two smaller cities. you not -- do not get the new york giants versus the philadelphia eagles. tom: kelly clarkson was on talking about it last night. michael: i love philadelphia,

too. [laughter] it is not the kind of glamorous media matchup at the networks -- jonathan: -- has a great story. -- jalen hurts has a great story. michael: they all had a great story. kansas city has patrick mahomes. lisa: do you think people would care more if they had monday off? jonathan: do it the following weekend on sunday, the following weekend where you get the monday off. i do not get it. lisa: there was pushback because it would take away from president's day. jonathan: i am not going to weigh in. do you really celebrate residents day? tom: this is a sore topic. jonathan: what year was that? tom: way back. he went to 12th in the 22nd. jonathan: you got together and celebrated the president's? tom: lincoln and washington. there was raging debate when they made it sensibly on a weekend to help families. to a whole cohort of fossils, it

has never been the same as actually celebrating 1809. jonathan: how does this work? tom: you do that on made a. jonathan: i wonder how serious you take the stuff. seriously? michael: they parade military vehicles in front of tom's house on mayday. jonathan: sounds like a tom thing. lisa has things to say. why are you holding back? lisa: [laughter] jonathan: you do not celebrate it. lisa: i celebrate by the kids having it off. [laughter] tom: liverpool, next. ♪

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tom: bloomberg surveillance super bowl friday. lisa abramowicz and tom keene, there are new -- and no to dumber people on network television on the super bowl than the two of us. we've got a lot coming up. we are wiring up with the owner of the boston celtics, he is rumored to do sports. we will do sports with him in a moment. first, we will talk to him about where the money came from, which is a credit market area to brief you on the credit market, s&p futures -20. i'm going to say, it is a exaggeration -- shields are moving. that is the way it is.

lisa: up when it comes to the benchmark 10 year treasury, to year treasury. have we seen the other assets that have moved on the heels of a downward shift in yields earlier this year? i think that is one of the questions. gina martin adams said no, stocks have not moved in tandem with some of the reset we have seen in yields. tom: talking to apollo yesterday and the stunt -- stub off of credit suisse and ringing it over the fancy part of the bond market, not trying to buy a t-bill, it is a huge interest. lisa: this is the question. we heard from jim at apollo that this is a golden era for credit. people are going into private credit at the same breath a lot of regulators are saying they're still concerned, haven't seen the shoe to drop in that area. where does this is connect get resolved considering we saw huge outgrowth of this sector the

past decades and the low rate era, now we are embarking on a different kind of reality. tom: i look at the yields space and it -- we have been debt ceiling free this week, thank god for that even though we had the state of the onion. he spreads have come in. ig, garbage ig and this word distress, those yields are coming in closer to the 10 year. lisa: let's go back to what gregory staples was saying out of dws, saying you have almost frothy credit markets right now. to him, you have the balance of leverage back to the sellers of debt. you are seeing spreads come in violently, seeing things price well. at what point does this indicate it cannot last versus this is the new normal? tom: we are going to talk sports later in a generous 25 minutes with steve, senior advisor of

bank capital. the only franchise in basketball, boston celtics. most importantly, with jim stelter who we spoke to yesterday, the cardinal rule is you cannot do fixed income. you cannot do debt. if you went to duke university, you have got to go to duke or you cannot do this. what was in the air at duke university that got you and zell to her into the debt game? >> i came out of the private equity business. tom: same thing. >> duke is a fantastic place. i am on the board today. it is a great environment and great learning environment, doing great things. tom: the jumble we are in, the day to day grind bloomberg surveillance does, give us the vision you have out one year on the abdication of that money in private equity. what are people like you going

to do? stephen: i think you've got to step back. we are seeing as you have talked about today, the unwinding -- we are back to normalized interest rates. if you look back at my career in the last 40 years, 30 of those we had interest rates -- work for percent, 5%. it is as of the crisis we have this cheap money. this unwind due to the fact when you increase the money supply so much and have low interest rates, you get speculative behavior and inflation. we are in for probably a 10 year cycle of going back to what i will call normalized interest rates. lisa: in the process, i am curious about the faces of private equity, taking a company, building it and cashing in and spinning it off in a ipo. is it getting to -- harder to cash in and do the do diligence of building up at a time where the ipo market hasn't recovered?

michael: -- stephen: equity markets are slow right now. if i step back and say the private equity model since i have been doing it for 35 years now, it has been a durable, successful model. in bad times and good times. fundamentally what private equity is trying to do is inject capital in businesses and grow them. it is a misnomer starting back to the dark days of private equity that it was about taking costs up of private successful equity companies, the technology sector, the medical sector, the industrial sector. globalized companies. the model has really worked well. when i started out, interest rates, we were borrowing money at 11% or 12%. you are seeing corrections of prices now. if -- we are still able to finance companies, we still have to become more selective and more fundamental.

now it is a more fundamental market than the speculative market created by the vast increase of money supply. lisa: over the past decade, a lot of people have talked about private equity and private investment firms taking market share from the bigger banks. we were speaking with apollo about the potential acquisition of a credit suisse arm. do you see that increase in taking market share? do you see that likely to continue the next few years? stephen: i do. when they broke glass eagle and changed the rules, banks had to be more conservative. banks used to be merchant banks, now they are just banks. a large private equity firm can become a merchant bank branching out into debt services, branching out into selling and buying companies. i think those private equity firms will continue to go in that direction. tom: stephen pagliuca with us,

owner of the boston celtics in a moment. we stay on global wall street. i love what you say about the merchant banks have become a regular banks, whether it is goldman sachs or frankly every other bank is a competitive effort to keep the spirit going. some would say mr. solomon at goldman sachs has stumbled. did he overreach by doing something that culturally did not fit goldman sachs when he and others invented targets and consumer banking efforts? stephen: i think nobody can get it perfectly. i think they identified the wealth management market was a great market. part of the issue is, we have seen this great change in interest rates now which has made it a comfort strategy. goldman has a good name and reputation. i am sure they will sort that out and be a factor in money

management business, they have the court skills to do that. tom: you are barely old enough to remember when dire straits took over the zeitgeist with money for nothing. as you mentioned, all, money costs something. the dire straits rate structure is over. how does the private equity market change? speak to the young turks in private equity. how does their world change now that money costs something? stephen: i think the world changes in that there was in the last five to 10 the years we have talked, there was a speculative bubble people believed everything could be amazon. putting money into growth capital companies would gain in share and you could lose money for long period of time. but, money is not cheap. you can probably do that -- for every one of those, there has

been a lot of ones where they will never achieve the potential. when you change interest rates, the value plummets. you have seen that now in the tech i think we go back to the future, when i started interest rates, we were borrowing at 10% and 11% and were successful. but you have to go to back to fundamentals and companies that gain share and become profitable. you cannot take the strategy of losing money for five to 15 years to then create a great business. it does not work and a world where money costs something. lisa: over the past decade, we were talking about companies that would borrow money to pay their stockholders. there was a lot of discussion around that. it seemed the debt side was less valuable than the equity site in many ways because you would get rewarded. the bond side and even in the equities space. do you see a greater opportunity on the bond site now, the credit side of the companies you invest

in than the equity, or is it more balanced? stephen: it is more balanced. there is always going to be a bigger returns with rate -- you create more output in equity by increasing companies market share. we are returning to the golden age of credit, where credit is being appropriately priced and people are getting great returns on their credit. i would not say it is expensive, it is more of a normal cycle behavior now. we looked at this, all of the economies were money supply increase of 50% or more, which is what has happened in most of the western world, after a period of time, you see large inflation that has to be corrected and go back to where the cost of capital is more normalized. that is going to be a 10 year trend. tom: on the super bowl weekend, it is wonderful you agreed to stay with us in our next segment. this will be most interesting. i want to touch on sports.

i think of malcolm glazier, what he did out of rochester, new york buying the tampa bay buccaneers years ago was a entrepreneurial guy, starting with his father with next to nothing who made it big in sports. the illusion today is, the reality i should say, there is the haves and have-nots of sports, of big, big, money whether it is petrodollar money or american tycoon money taking over sports. how you adapt and adjust to that to do social good of what a domestic economy wants? let's take english football. how do the big guys come into english football like the saudi's in newcastle and yet support the domestic people of the united kingdom? stephen: that is a long, complicated answer. i have experience having in italy, sports can be a fantastic change or social good.

in terms of specifically the structure of soccer in -- what they call football in europe, it is much more grassroots, much more teams can come up and down. what these new owners have to do is recognize their community asset in both triumphant win, but share the spoils with the teams on the bottom. i think the u.k. just came out with a large, regulatory report in terms of reforming the system where more money will go to smaller teams so they can feed the larger teams. secondly what has been great about the usa as a leading model is, the nba has in be air -- boston celtics united justice and -- foundation has given millions of dollars back into the community. our players go out there, as well. sports franchises can be a real impact for social good. specifically to the question on european leagues, it is different in the u.s.

it is a grassroots basis, looking out rules and regulations to make it be more fair and support those teams. tom: on a super bowl weekend, we are three old -- thrilled to bring you stephen, the owner of the boston celtics and the most stored court in basketball. stay with us. this is bloomberg. good morning. >> keeping you up-to-date with news from around the world. the death toll from earthquakes in turkey and syria has risen to more than 22,000. experts fear tens of thousands more people are buried under the rubble. turkish president is facing mounting criticism over the country's poor construction record. he is being criticized for the governments response to the quakes. china is accusing the u.s. of exaggerating the dispute over the balloon shot down off the coast of south carolina. the biden administration says it was conducting surveillance and has offered evidence that backs

that up. today, china's foreign minister again said the balloon was used for civilian use. bloomberg has learned box has turned down offers of more than $2 billion for its tv streaming service, more than four times what it paid for the business. fox ceo wants to keep tv because of its fast growth. to be is a free ad supported offer -- service and is bringing in viewers these days. global news powered by more than 2,700 journalists and analysts in over 120 countries. this is bloomberg.

this is ge aerospace, advancing flight for future generations. ♪ welcome to a new era of flight. >> this is the golden era for private read. rates have been rising, economy is doing pretty well. you can get double digit yields. this is easily the best time to be an investor. if you issue vintage credit, the

best in 17 or 18 years, you're getting double digit returns by bending at the top of the capital structure. tom: jim seltzer with us on debt and private equity, talking to steve with bain capital and co-owner of the boston celtics. lisa abramowicz and tom keene doing a wonderful sports ramp up here. we do that now with steve, we need to bring in someone encyclopedic on boston celtics, which for me, always, michael mckee -- bob cousy and in what he did long ago and far away. you are up beat on the new celtics. michael: [laughter] tom: a couple piercing questions. michael: let's get this out of the way. and ask you about yesterday. mike ms. kollek coming to the celtics, you guys did not do much beyond that. there was a expectation you

might package some of the players or draft picks and pick up some stars that had been floating around. you are satisfied being the best team in the nba right now, i guess. stephen: [laughter] we have a great group of players. high character, probably one of the tightest roots we have had in 20 years we have been involved in the celtics and almost won the nba finals last year. we have dinner at broadman, a major plus. we've got more help with mike skala. we are in a good position as long as we stay healthy. michael: a quick question, jaelyn brown, how long is he out? stephen: he is still being evaluated. hopefully, back in a few weeks. we basically will not put players out there if they can be injured. the doctors are looking at the best course of action.

he will be back soon. michael: i have got to ask, matt yeshiva walks out of the board of governors meeting shaking hands. new owner of the phoenix suns and a couple hours later, mortgages that franchise to get kevin durant. is that the kind of move that is good for the nba? stephen: i think it is exciting. it has caused a national surge, a powerhouse out of phoenix. the issue in the balancing act you always have to do as a sports franchise owner is the long term versus the short term. it sounds like matt has a philosophy they have a team on the cusp. having a starter like kevin durant is worth it in the future, that is -- we will see how that pans out. tom: i have got to drive the conversation forward. i have been briefed by jonathan ferro who brings real expertise here. there is an american interest in the premier league, which i am speaking as an amateur is the

best run league in the world or the most effective league in the world. it seems like every saturday is a world cup on nbc. i'm looking at manchester united and the turmoil there. i'm looking at the new ownership of chelsea. as you look as rumored to liverpool, what did you learn from the chelsea ballet? what did you learn in the last number of months about how a guy like you from bain approaches the premier league of the united kingdom? stephen: it was a great learning experience and a fantastically. as you know, i am the co-owner and chairman of apple anza --a fantastic league. we have learned a lot from that. and the premier league. i think the premier league has very high values because it is a fantastic product. the television revenues are high and attracts great players. the chelsea situation, the price

was a very full price. i think that is motivated -- has motivated other teams to try and sell. i do not know if that value is going to be justified for all the other teams, but long-term sports is a great investment because you have seen it go up year after year. it is the only property on television that is must-see tv. as the whole tv market has changed from linear to digital and now bundling and unbundling and streaming, these sports products have become more valuable. there is a bright future ahead. tom: if you were question. john from malan emails in, can avalon to do better if they see malan through the season? stephen: we are excited about it. the family and scouts have done a fantastic job bringing young players. the second both score in syria

-- coil and has just turned 20 player, making a impact as well. hopefully, we can be better and at the top of the league. we have a big game this weekend and hopefully we win that one. tom: it is like the manager in baseball is banished from the dugout and they are calling on the phone to tell him the place. ferro is in my ear, ask him about malan. lisa: i want to build on what you were saying, sports products are attractive to you and the asset class is growing. i'm curious what the analog is in owning sports teams, whether for revenues, advertising, social presence and how you evaluate that. what kinds of investors are appropriate for this area? stephen: you have seen the massive increases in sports

franchise values across the board. really, that is because they hold value and because the promise of television revenues and basically branding has been fulfilled over a long period of time. they create large fan bases. technology has globalized these sports franchises. when we were growing up, you could not see a soccer game in london. now, you can see it all over the world. the big sports teams, including the nba and soccer, which are both local sports, are now counting fans in the hundreds of millions rather than the millions. now, you can use that brand power to monetize. second, there is a almost also like painting aspect to this. -- picasso like painting aspect to this. it is a scarce asset locally,

franchises, companies like chelsea are unique in the middle of london there. there is a intrinsic scarcity value plus an economic value of the properties because of the television revenues and the central role they played in attracting viewers in the larger competition as we see youtube, apple and other tech companies approaching on the broadcast space. lisa: real quick, i am curious what the middle east money has pushed out other bidders from the london clubs. stephen: you are seeing institutional capital come in. with these kind of values, that is going to happen and they have strategic interest in building the brands of those countries. tom: right. stephen: there is just another factor, another source of capital. tom: one more delicate question with great respect for the way

you have done sports. there is a massive uproar about man city. i was making jokes the other day, it was far more serious than anything we saw with the houston astros. how do guys like you help with the arms race and the outcomes that are alleged at manchester city? stephen: i am not involved. if i step back in general, i think a good model in the nba were adam silver and david stern. have done a fantastic job in enforcing fairplay rules and making sure everybody has a level, competitive field. that is the way to do it. i applaud the leak in syria for doing the same thing and enforcing everybody playing by the rules. at the end of the day, no one wants to have unfair competition or watch unfair competition or have people who are bending the

rules or violating the rules and succeeding. that is fundamental, fairness in sports. tom: i got all of 10 seconds. eagles or chiefs? stephen: i love my homes, so i say chiefs. tom: very good. greatly appreciate it. always think michael mckee for piercing questions. lisa: foreknowledge that we do not have. [laughter] tom: and thank jon ferro -- in my ear about the whole thing. michael: i want to get his advice. we went to copley square for nba finals last year. he had tv set up. they need bigger ones. pacs needs to get bigger tbc company for the nba finals. tom: you have a great weekend as we celebrate american football. we've got much more coming up, really important day with good conversation to get you through the weekend. richard haass at 12 noon, a

wonderful new book. omers, fast. i know some consultants with great ideas. can they help us improve our digital experience? absolutely. they've invested over $2 billion in tech. that could really help us manage inventory. and save us a ton of dough. then let's take back our market share. checkmate, chess heads. girls, i said “bedtime”!

>> we are separate the biggest weekly loss on the s&p 500 on the year so far. we are set for the first weekly loss of the year so far. equity futures are down .5% rate the countdown to the open starts now. >> everything you need to get set for this start of u.s. trading. this is bloomberg, the open, with jonathan ferro. >> live from your, coming up. looking at the inflation grid. russia is setting to cut output, and japan is closing in on the next saints row bank chief had