>> on john heilemann with the first word news. in brussels, the nato secretary-general will meet with defenseman editors to discuss weapons and tanks and amusing for ukraine. the issue of aircraft is not the most urgent right now. he says ukraine is going through ammunition many times higher than allies currently have production. the defense ministers will meet in the evening and early wednesday to discuss spending targets. volodymyr zelenskyy's defense chief quelled accusations over corruption in the top echelons of the government. the defense minister is doing damage control after officials were swept up in a probe looking into procurement violations and skimming funds.

zelenskyy signal support for his top aide as they brace for a russian offensive. antony blinken is considering a meeting with china's top diplomat later this week. it would be the first face-to-face talk since the chinese blue -- balloon lead to a new spike intentions. he called a for meeting this week at the u.s. identified and legend chinese spy balloon. a day after the trip was canceled, the pentagon shut down the balloon off south carolina. divide administration suspected three unidentified objects down since last friday served commercial purposes and were used -- were not used for spying. president bynum will name vice chair brainard as his top advisor. she would replace brian deese. she would work alongside a former fed official, treasury secretary janet yellen key players in the administration's economic policy. the u.s. environment protection agency says norfolk southern may be liable for cleanup costs

related to the derailment of a train carrying hazardous materials. it started a massive fire in ohio earlier this month. the norfolk southern spokesperson says they will continue to perform or finance varmints of monitoring or remediation. global news howard by 2700 journalists and analysts and 120 countries. i'm john hyland and this is bloomberg. ♪ >> welcome to bloomberg markets. kriti: they were so much build up this morning and now we are getting a mixed reaction. the s&p 500 is flat on the day. at the same time bond yields moved as much as 10 basis points on the 10-year yield. now higher by about five basis points. you are still seeing the market

move. really breaking apart the correlation we have been so accustomed to in the last year. the dollar not doing a whole lot either. not taking the direction of the bond market. perhaps not influencing the stock market as well. we will see if that changes as we approach the closing belt. we have to look at the commodities story. nymex crude doubt about 1%. john: a lot of earnings we continue to watch. i start in technology where talent here shares are up about 15% -- palantir shares are up about 15%. there is a theme here around services inflation which we have been monitoring given the economic update we got from the government. marriott continuing to see people travel and willing to pay for rooms. also business travel returning is a consideration for prices

for room rates. avis budget. people are renting cars. the other part of their business, a more corporate focus is encouraging in terms of the performance. the fact people are traveling in renting rooms and people are going out to events. coca-cola stock is down but they have had some inflation related power. p organic revenue encouraging -- the organic revenue encouraging. people going out to concerts and restaurants is a lift to some of those bottom-line performances for companies and playing into the inflationary story. kriti: speaking of the inflationary story, it comes down to are we approaching the end of the tightening cycle or is there more to it? tom barkin says that might be. he spoke with bloomberg television earlier. listen to what he had to say. tom: we made our may not choose to take rates up if inflation continues to persist we have to see what happens. if inflation settles, maybe we

don't go quite as far. maybe we will have to do more. kriti: that is his take. torsten slock wrote earlier the risks are rising that inflation will be sticky end could go higher in the coming months. torsten, always a pleasure to have you on the show. let's go to the cpi readings. 60% was just housing and the markets are banking on the inevitability house prices will eventually come back down. is that a fair assumption to make? torsten: this is an important part. your interview was talking about if inflation comes down quickly then it will be fine. if inflation comes down slowly, we will have a problem. one worrying issue is that the interest rates, the components of the economy responded to the fed hiking rates. housing responded more negatively. autos responding negatively.

if you look at the data more recently, you see some signs of stabilization and even improvement of the housing market. traffic of prospective buyers is moving higher. we are seeing the homebuilder sentiment indicate a move higher. the university of michigan, more improvements and consumers for buying cars. if the interest rate is a component of the cpi basket beginning to improve, we are running the risk that maybe inflation will not continue to go down the way we would all like it to. maybe it could be more sticky and persistent because those things that have been dragging inflation down in the last nine months made a longer provide a significant drag they have done in the last three or four quarters. jon: the idea of a re-acceleration of inflation is the kind of thing that could play out through the rest of 2023 depending on how things

play out? torsten: that's an important question. for now, when you look at the employee report at 517,000 jobs created in january with the unemployment rate falling to the lowest level since the 1960's, participation rate moving up, the workweek moving up. from a different survey you have the jobless claims, the people filing for unappointed benefits at a very low level. you had a number of job openings at 11 million, all-time record high. you have a strong labor market. the answer to that question is it depends on slowing the labor market down. there is not much sign of that. we are seeing the service sector doing incredibly well. hotels, restaurants, airlines, sporting events, concerts. we track a many people go to broadway shows. that makes up 80% of gdp. that is services and is not showing signs of slowing down. that is white it could last several more months before we we

begin to get to slow down the fed is looking so much for the moment. kriti: we talked about housing and labor. can we talk about commodity costs? yes, prices have come down but a good contributor to the increase in cpi was food prices, oil prices. are you factoring a base case of $100 oil or somewhere in that range? torsten: that's a really important issue. not only did we see a turnaround and food prices -- in food prices, there are reasons to be worried about food and energy moving higher. there is capacity issues in the food industry and capacity issues in the energy industry. more importantly, we have china reopening. that has not yet boosted commodity prices. if i look at the bloomberg screen, i'm not seeing a significant move higher. we should expect to see a move

higher in base metals and agriculture prices and energy prices. if you have the combination of both housing stabilize, the auto sector is beginning to stabilize, and you now also might even get a lifting commodity prices, that is complicating the offer for the fed. it is the case that inflation is at risk of being more sticky and the fed is at risk of having to raise rates more even more than the market of pricing. kriti: but no landing scenario making around on wall street. all credit goes to torsten for coining the phrase. torsten slock, from apollo global management. restaurant brands is a stock slumping quite a bit in today's session. we will talk to patrick doyle about the company's results and incoming leadership. this is bloomberg. ♪

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kriti: this is "bloomberg markets." let's get to the stock of the hour. restaurant brands falling about

3% after reporting slower sales growth in the fourth quarter. the parent company of burger king, popeyes and tim hortons announcing the chief operating officer will take over as ceo at the start of next month. i want to dig into the numbers and joining us is jess. jess: the stock on pace for the worst percentage is lost since september. that happens on the back of the fourth quarter results. adjusted earnings did become -- did come below expectations. comparable sales growth trailed estimates. the company also owns popeye's, tim hortons, and they didn't name a new ceo who is the chief operating officer. he will be effective on march 1. when it comes to the restaurants, higher costs and economic uncertainty are a problem. if you look over the last 12 months, the stock is up 60%,

outperforming the -- 16%, outperforming the broader s&p 500. it is still rated as an outperform with an $83 price target. jon: it will be interesting to watch for all the big brands out there, depending on where the economy goes from here, what kind of competitive pricing we see to keep customers coming into the different restaurants. jess: it's a key focus. we had earnings from yum! brands. they have had different issues when it came to looking at what their growth was like in china. if you're looking at yum! in the past 12 months, they are down 9%. when you are looking at restaurant brands, the stock up about 16% in the past 12 months. because of today's losses restaurant brands is up 2.5% year-to-date. when it comes to a lot of what the analysts are looking at, it

has to do with the succession plans. they are keen to hear what else is going to come out of that. they don't think necessarily just the ceo move will be the only one. they think more is to come. jon: thank you very much. let's talk to somebody at the center of the road ahead for restaurant brands, the executive chairman patrick doyle, who is no stranger to this industry having served many years helping to bring dominoes into the digital age and came aboard as executive chairman of restaurant brands late last year. nice to happy with us. walk us through with the main priorities are going to be as you go through this leadership change. patrick: thanks, jon. it's all about accelerating growth. the businesses are performing well. i feel good about where we are. the one that needs the most work right now is burger king in the u.s. we did a five comp in the fourth quarter.

not as good as we want to be but it's going the right direction. the popeyes business is grace. firehouse is a good business. international is fabulous. tim hortons is a terrific business based out of canada. probably the most loved brand and its home market anywhere in the world. doing very well. the jewel digit comp up in the fourth quarter. continuing to recover from the downturn from the pandemic. it is a commuter brand. they get a lot of people early in the day. i'm feeling good about where we are. with josh coming in as the ceo starting march 1, jose did a great job getting us here. it's about accelerating growth. how do we move faster and help the franchisees be more successful? that is ultimately what will generate more growth for us. kriti: speaking of the growth and the franchisees, mcdonald's came out and said they would be supporting the european

franchises more with lower royalty rates. you mentioned burger king. do you think restaurant brands is looking to do the same with that franchise? patrick: our franchisees in europe are doing very well. we announced the reclaim the flame program in the u.s. for burger king, which brings in some ad dollars from the company and financial support both upgrade technology in the restaurants. about 3000 restaurants will get new technology over the course of the year, as well as upgrades on assets. we think that will help get the momentum going. the franchisees have committed they will up their advertising commitment as long as we hit certain thresholds for their franchise profitability at the store level which we think is very fair. we are confident we will get there. we invested first, get them to invest with us. that will get the momentum we

need on this business. jon: i look at the list of brands that restaurant brands has. you have doughnuts and you have chicken and you have got burgers and subs, a business you are still integrating. you were the pizza hat. how will you think about the possibility of expanding into other areas? you obviously have a focus now on getting what you have right. patrick: we definitely have enough to work on right now with those brands. i think when you look at them, the big opportunities our first that focus on the franchisee profitability. they are all down a bit from where they were. they are all already starting to recover. some of them pretty smartly. we have to keep that going. on the international side they are doing very well. the big opportunity for growth from a restaurant count

standpoint will be in international. burger king continues to grow very strong outside the u.s. now we have these three great new brands we can take through our distribution, our partners around the world. popeyes and tim hortons and firehouse around the world. we think it's an amazing recipe for growth for a long time to come. kriti: let's talk about pricing. some of your competitors are talking about pricing. you mentioned international growth when a lot of countries are staring down the barrel of a potential recession. are you changing prices? patrick: there was a pricing shock last year. it is something we have not really experienced in probably 40 years. a very quick spike in a lot of commodity prices around the world. everybody had to adjust pricing somewhat. we think we did it in a very careful way.

consumers still want value. we are already seeing, if you look at the primary commodities, beef and coffee and chicken, we are seeing some easing. some of it pretty significant. i think we are in pretty good shape for a pricing standpoint. ultimately value is one of the drivers. you have to do it in a smart way so the restaurant profitability continues to build. we have also got to be careful. consumers are always looking for good value. jon: before we let you go we should remind the audience when you came into this role you acquired stock and you've locked it up for the next two years. you're a shareholder. would you consider buying more stock? patrick: i have bought quite a

bit so far. i very committed and locked up for five years. my investment committee, my wife, would say that is probably enough at this point. jon: patrick, thank you for your time. we appreciate the update on the business. patrick: i appreciate it. jon: patrick doyle of restaurant brands joining us on the road ahead for that company. coming up, the road ahead for ford shifting in the high gear with a letter vehicles which comes with more layoffs. we will talk more about how it is in fact in the company next. this is bloomberg. ♪ ♪ in life - a “why.” maybe it's perfecting that special place that you want

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jon: time for what it's worth. 3800. that is how many jobs ford is shedding in europe as the shift to electric vehicles take hold. their car lineup in europe will be battery only by 2035. that will mean smaller product development teams. martin sander is ford's electric vehicle unit in europe. >> we are facing headwind in the industry. i think about the total industry, the lowest point for many years. tough competition in the european market. from a cost perspective we are competitive going into the future. this is why i have decided to improve efficiency of our company. a large number of activities is

also is the elimination of 3800 roles across europe. kriti: fascinating stuff there. it's interesting to see shares down about 1% for ford. ordinarily if this was a tech company they would be rewarded for those kind of layoffs. that's from the share price reaction for that sector. not seeing that when it comes to the auto space. jon: this is a massive transition, a complicated one for the legacy players in the industry. we see that with reporting around the transitions to the f1, the f-150. in the markets obviously you have a behemoth within ev's, even though it is smaller on paper, in tesla. kriti: it is the primary mover when you look at volume, really moving the benchmark. the benchmark doing a lot. s&p 500 flat on the day.

nasdaq higher by about .3%. really driven by the story of tesla and those chips. more markets coverage is ahead. this is bloomberg. ♪ for businesses of all sizes, there are a lot of choices when it comes to your internet and technology needs. when you choose comcast business internet, you choose the largest, fastest reliable network. you choose advanced security for total peace of mind. and you choose a next generation 10g network that's always improving, getting faster; more reliable; and more intelligent to keep you ready for today and tomorrow. the choice is clear: make your business future ready with the network from the most innovative company. comcast business. powering possibilities™. these days, our households depend on the internet more and more. families grow, houses get smarter,

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romaine: maybe we will have to do more. the market now and focus in adjusting. scarlet: a little bit of red on the screen for valentine's day. largely in line with what people were expecting. romaine: certainly some elements within that report giving some people pause when it comes to whether the fed itself will pause. 4132.