>> the market is prized for the fed to be hitting its targets. it's remarkable about the fed is telling us as much as they are. the benefits of the decline in inflation, are we plateauing? if investors start to look across the valley, they turn really, really quick. jonathon: a year of pain for the people of ukraine, thousands of lives lost.

a milestone we all hoped we would not mark. tom: one year milestones of wars that usually take more than one year. with mr. putin's comments, the phrase i see out there in the english press is that mr. putin doubled down. how do we double down? jonathon: i think we face the fear of escalation. russia is in talks with the chinese manufacturer about buying 100 to. where would that leave this war? jonathon: we have a great set of guests and daniel tennenbaum will join us. he is expert on the efficacy of sanctions. have they worked in will additional sanctions work? jonathon: full coverage coming up through the morning.

let's get into the price action. equity futures -.4%. that's a messy when we can address later. we are heading towards the first three week losing streak. equities are softer and yields are higher. 3.8984. tons of fed speak this morning. tom: we have a lot of economic data. you mentioned yesterday we are starving to get to the delayed jobs report for february. usually it's a first friday of the month and we are way past that. i agree the date along the way will help us gauge that and what i see is we are in, we are out. it's short squeeze potential. in the last couple of days everyone has loaded up on gloom.

jonathon: bad news is bad news and bad news is good news. we have to talk about new leadership at the boj. we have some insight in the past day or so. larry summers told bloomberg we should think of ueda as ben bernanke. whether that's an encouraging thought is up to you, you decide. tom: m.i.t. has a different feeling they have growthiness

back to 1957 and robert solow. bernanke was trained under the ministry of economic growth. the threat for japan that it's a busted thesis. how do you get out of it and maintain some sense of lawfulness or growth? jonathon: can we have a shout out to stan fischer. another student of fisher. tom: professor fisher told me once and paul samuelson, was so angry at fisher that he grabbed the stock out of his hand and threw it against the wall. that was the intensity that ueda and others were weaned on. there is an acuity but this guy is different than what we have

seen with an l pp government linkage in japan. jonathon: we will try to pick up on that story when we talk about japanese central bank meeting. march 10 is the last meeting of the central bank of japan for governor kuroda and then we get payrolls as well. max kettner joins us from hsbc bank. you came in and you dropped your call on equities have you changed your mind now after what we seen in the past few days? max: it is quite remarkable the bearishness that we have seen over the past few days. u.s. equities stand in a top spot. they have outperformed too much. compared to long dated real rates. compared to interest rate

volatility. there has been a bit of correction and equity. we were pretty vocal over the past few weeks that whenever we see dips, we would rather be taking these opportunities to buy rather than throw in the towel. we look at other markets like the euro zone equity market, thus just a few tens of a percent away from the all-time high. things may not look good in u.s. equity markets but in other equity markets they look ok. jonathon: we will have 10 minutes to talk about ukraine. france is up 13%, italy is up 15%. how can that continue? max: it boils down to the

overall economics and earnings outlook and expectations. the reality is that we went into the winter of 2022, 2023 with bearish expectations. the consensus three or four months ago was the consensus that a calamity would happen in the euro zone. the gas crunch, real incomes being squeezed even more. we had very pessimistic expectation and that has only just started to turn a little bit when we look at consensus gdp expectations in the euro zone. they have only started to rise ever so slightly at the start of this year. the same things goes for earnings expectations. they still look a little bit too high but the s&p earnings

expectations were above $57. we are now below $51. can we come up with the bearish near-term picture if we see bearish expectations already? tom: help me with the calculus of the moment. we are moving so fast and you've been good at moving fast. i am leaning on three month annualized data. are you doing that at hsbc? do you look at 90 days of data and look from there? max: in subparts yes. i was puzzled, at the start of the year we had pushed from clients i would say when you look at the december activity data out of the u.s., is indicative of a recession.

why are you going bullish now? now that we have a rebound in the january data people are saying this is the big re-acceleration. we are in the middle. in december, the u.s. had a tough time when you had -40, -50 degrees celsius. and then month over month there was a bit of a rebound. we are in the middle, growth is not what we expected three months ago. we are seeing some acceleration but i don't think it will be a great reacceleration that leads to more hawkishness, like a 50 point basis point hike. tom: what is your equity allocation within multi-asset? is it international, u.s., u.k.,

domestic, what is the factor that determines the equity allocation? max: we are liking eurozone. we are not overweight in the u.s. or japan, we are under wait in japan. we are focused on the euro zone and a little bit in emerging markets. the u.s. has outperformed the move and rates a little too much but having said that, once we get those steps in u.s. equities in the growth market, i think with almost 80 basis points priced from the next few fed weekends, we have more potential for dovish surprises for long-duration assets and equities. it will be the time to use those steps to scale up exposure in

u.s. equities. jonathon: thank you for that, max kettner there with hsbc. u.s. dollar is negative for the fifth day. and last december we saw a peak in the u.s. dollar. tom: i look at dxy, and we have come back but my word, we have a long way to go to reassert the strong dollar trend in the technical damage of this weak dollar is substantial. jonathon: i was going through the dollar in the bond markets onto year, 471. this will be the fifth straight week the two year yield has climbed on the week. on the month, the fed has a 50 base point move. tom: how do we adapt to this

grind higher in yields? david rosenberg was talking disinflation. even with that, do we have to get used to this new rate environment? that's a big theme for the end of march when you put out your outlook. mr. rosenberg things the strong data is ahead fake. he is not alone. tom: he has been so good at this for decades, goods deflation. jonathon: up next on this program, a milestone nobody wanted to mark. one year of war in ukraine. this is bloomberg. keeping you up-to-date with news from around the world. the u.s. and other g-7 nations

are marking the one-year anniversary of russia's invasion of ukraine by unveiling new sanctions. they will single out russia's defense, metal industries and financial institution. there will be more pressure on countries to decide between the u.s. and russia. china is calling for a cease-fire between russia and ukraine but the plan has little chance of winning broad support. china's measures would offer benefits to vladimir putin including a call to freeze russian troops in place on ukrainian solo. -- soil. a so-called tabletop exercise was held in washington to focus on hypothetical scenario of north korea's use of nuclear weapons. they have been building up their ability to deliver an atomic strike.

u.k. housel confidence rebounded. signs have emerged that the worst bout of inflation is starting to ease. g f k's consumer confidence remained close to the historic lows triggered by cost-of-living crisis. thomas h lee has died. he ran his boston-based firm from 19 74-2006. when it had $12 billion to invest. his best-known action was a takeover of snapple. global news 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. ♪

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>> it's not a war, its terrorism.

it is genocide of the ukrainian population. he can try everything he can but we are still unbroken and ready to defend our hometown. defend our country because it is our family. we are fighting for our children, our future. jonathon: one year out from potency invasion of ukraine. the last milestone we'd hope to reach. tom: when i was 12 or 13 years old, i had an assignment to look at the news the day before some big event and i pulled out of the hat november 22, 1963. i went back today and looked at the new york times one year after pearl harbor and the new

york times one year after the fort sumter battle. this is different and the reason this is different is the immediacy of information transfer. the images we've lived, the news we have lived knowing that when president biden sits in poland in speaks of atrocities, we have seen them. they are not distant as they were in december of 1942. jonathon: china is at the epicenter of this. we had a china cease-fire proposal, a 12 point blueprint and part of that included a cease-fire which would fruits -- freeze russian troops in place. russia holds veto power there. how effective was our proposal and is it dead on arrival? it feels like a stud on arrival.

tom: the best map i have seen. it brilliantly describes what you are talking about in the basic idea here is that 11 months ago, the russians were very successful. they were coming in from belarus and all of that eastern territory they've been fighting for years. the map now is a testament to what ukraine and the allies have done. i did not realize how radically different it looks 11 months on. jonathon: how close are we to nato members sending just? tom: i would ask the finns, the baltic states, germany without baggage and the prime minister with this moment of silence in london. jonathon: compared to where we were three months ago?

we were sending additional missiles and tanks were like a no go. that was a redline and here we are talking about sending jets. tom: i think it is fascinating to see the idea of the buildup and how mr. putin reacts to it. to me, i will defer to others. but to me, i think it is extraordinary. i would have to lean on experts right now. who do we have over in europe? we have anne-marie over in london. i think we should start with maria in kiev. maria: when you look at the map and see how ukraine was able to repel russian forces. when you get on that train from poland to keep you start to

broach the capital of ukraine you realize just how big this country is but you start to get to see the real fighting. the other thing that happened on the train. you realize you are on the pack trained and it's only women there and at his suit, this is a country at war. this idea that this will not and any time soon so we need these men here. in this morning, president zelenskyy address those troops and said yes, kyev feels safe. when you hear nothing that's when you need to run but you have to think your troops. tom: does ukraine have the

people to get through the next year? do they have the manpower to staff the army? forget about the missiles, tanks. do they have the people, the manpower? maria: the question would be do they have men willing to go and every man here says yes because they believe this is an existential question for this country. we will not do it for the money, we do it because we believe that we are going to win this war. when you talk to people, forget about the official line, just people on the ground do you believe you are going to win this war? they say yes, we are going to win the war. tom: i want to bounce a note off

greg lva he speaks the -- speaks of the deep peopling of russia. is that the worst threat to putin that people are trying to leave. annmarie: if you're from a certain social class and you have a higher education is easy to leave. what we have seen is a brain drain of these individuals leaving russia. many of these individuals are educated and they don't believe the propaganda. they have left with their families. you see this in the likes of the uae and dubai and inonesia. i was sitting at one of the hotels and all i heard was russian around me. you see these individuals

leaving, they want to get out. this is a vast country with multiple time zones. they do have the capacity of other russians and the one big questions as we had this one year mark is whether or not there will be another conscription. jonathon: just to build on the work you've done regarding the chinese government. they have offered to seize fire proposal, was a response to it? annmarie: the west is saying they don't have a leg to stand on. there was a united nation's proposal that was a peace proposal but it did say that russian troops would have to leave ukraine. china abstain from this yesterday. all of these things china is

talking about in this 12 point plan they have already said. jake sullivan said yesterday they could've just stopped at one which is that they had to respect the sovereignty of all nations. what china is trying to do is look like a statesman but we have talked about this. xi jinping has engaged with the top levels of the russian government. this relationship is rocksolid and they have built upon this no limits relationship but behind-the-scenes, china has not dealt with the ukrainian people. it puts them in an awkward position. they can't come out and say they're against it because they know china could put the weight on putin. jonathon: we will keep this coverage going through the morning and catch up with them in an hour. let's go back to the reporting

from der speigel that there are talks between russia and china about buying drones for the war effort. that's what precisely the u.s. is concerned about. tom: they have proven to be hugely effective. all this means there has to be a new engagement with the pacific rim for america. we saw that in the philippines and we see it with korea and japan? jonathon: coming up on this program we have eric nelson from wells fargo. this is bloomberg. ♪

jonathon: a four day losing streak on the s&p. a messy situation everywhere on thursday. on the nasdaq we are down .9% s&p facing a third straight week of losses. in the bond market let's get to the two, every single week the two year yield has been up we are up another basis point to close the week at 4.7 no.

the yields are higher on the tenure at 3.8926 and i want to finish with the euro, the euro-dollar has been negative for five straight sessions. thus streak is unbeaten unless you go back to last september. we are down by .1%. late september there was a peak in the u.s. dollar. we are above parity now. tom: stay around here, in two hours you make it a real data check. jonathon: it's a real move

in the euro-dollar. tom: you know what the problem is, i am getting all of brammo's hate today. i don't get any mail. jonathon: we miss lisa. she's going to be back by monday. we will talk about the fed speak . wells fargo has this to say, the biggest risk is where we get a temporary real acceleration and activity in the fed get spooked, shifting back to tightening and a 50 bp increments again. in that scenario volatility would likely jump across the markets and exacerbate the looming recession. tom: it also rebalance and to

the bond market and equities. with your scenario of 50 bp's. is the sum of all the parts. how to use the dollar study to bring it into all of those other parts? erik: we look back to 2022 and what you had was such a toxic confluence of tightening financial conditions. you had a strong dollar, higher volatility, the fed was raising rates at 75 basis points. that's a challenging environment for the economy.

that's a very challenging environment to make decisions. that's what the economy in the market wants to avoid. it's not just the dollar itself but the confluence of financial conditions. tom: i'm going to go off plot, what does the 6% terminal rate due to em? erik: it's not pretty. you have the resilience in the global growth which could keep em supported. if it gets to 6% and we look around the world the swiss franc, the euro, they could all raise rates further. there's not indicator for yen investors.

that could change the capital flow for em which is so far been good. we heard from the boj governor said he doesn't want to come up with a magical financial policy. the situation remains that it would take some time before we secure the 2% inflation. could you imagine someone at the ecb using the same language that the boj is using? erik: when you look at the spot inflation picture and where wages have been trending, we came into the year and we were in this campus well that there was a lot of bullishness around the yen. now we have global yields

rising, the boj will not normalize policy in the near term and all of a sudden, that picture for the yen looks much different. if you look at the flow data, japanese investors are buying foreign bonds again. in the near term, the yen is clearly the most obvious funding currency. jonathon: look at the competing forces here. we are talking at qt at the ebc, the federal reserve and then you have japan sticking with the curve control. if japanese money comes home and away from the u.s. markets, that's not happening. how does that complicate ecb and feds efforts? erik: so much of it comes down to the flow side. in some ways, it makes the fed

and ecb's job a little easier japanese investors are buying bonds, we don't have this fear of exodus and the risk of that real meltdown in treasuries or oat it makes it easier for the fed when it comes to funding risk. you have to watch these flow so carefully in terms of where is that yen going to go over the next six months? at some point, the patients of the yen is starting to wear thin. tom: what is the global economics, what does japanese growth look like? do they get weaker growth, lesser inflation?

do they go back to zero growth? they get a nominal gdp that gets near 0%, what is the scenario that you see for this outcome? erik: if you look at what the boj is projecting for the output gap is in flows at this point. if you can get marginal juice out of a couple of months or a few more quarters of some of the nominal price growth, does the wage picture start to take hold? in germany they've done great work on the psychology of inflation and when people start talking about inflation that can change the paradigm. i wonder if the same dynamics take hold in japan. that is what the boj is watching the spring negotiations. tom: this is a huge unspoken,

the vcu research on this is the emotion of behavior that people have, society has over a new inflation regime. japan, where inflation is a new experience for millions of people, this is unspoken. jonathon: the leadership of the boj sees this as a once-in-a-lifetime opportunity. that's why it will be difficult to move away from this. i want to get to the epicenter of your piece on the federal reserve and the u.s. economy. you think the data we have seen so far might be a head fake that turns the fed to do something stupid? erik: if you look at the past seven or eight recessions in the u.s., it's common to see an acceleration in things like real incomes or payrolls.

these are coincidental or lagging indicators. the leading indicators, the housing market, manufacturing sector, there is plenty of reason to think there are some quirks this time around because of covid. to me, there is a strong signal coming from leading indicators that is hard to ignore and i do worry about too much focus on this lagging and coincidental indicators like cpi. jonathon: lovely input as always. eric nelson with wells fargo on the central banks and what's happening in the u.s. economy. he had a great piece in the spectator. jonathon: it's a conservative thinking magazine. tom: the stories are all too long. jonathon: 40% of the british

public would put the foreign secretary out of basic hotel for two nights. just 14% would select the five star a combination. 30% would stretch to a four-star hotel and 7% would rather them share a room at a basic hotel. there is some pushback against how much politicians are spending when they go on tour. tom: i would push back and say that it's outrageous what it cost to travel whether you're a government official or not. you burst out laughing at what it costs. the flights, the hotels. jonathon: consumer discretionary

saw massive growth year to date because that's where the competition is. tom: i will continue to say, corporations adopt and they will adapt to this. maybe it will be tough sledding but that's what you need to do in a rates regime. tom: i've never seen so much optimism about manchester united. it's like ferguson redux. jonathon: you want to be in the champions league. tom: they're playing efl, how many things do they play? jonathon: a few. tom: don't they just play the premier league?

i've chosen a team for you and i have that for you in a moment. this is bloomberg keeping up today with news from around the world. it has been one year since russia invaded ukraine, the u.s. and other g-7 nations will mark the occasion by imposing more sanctions on russia. the defense, metal industries as well as financial sanctions. there will be a crackdown on those who help russia evade sanctions. the polish government has promised to deliver 14 german tanks. spain may increase the number of tanks is sending to ukraine. china is set to overhaul its financial system giving president xi jinping more control.

and one of his key allies may be appointed to a top position and china central bank. boeing has paused deliveries of the 787 dreamliner over a documentation issue over the fuselage component but they say it does not pose any safety issues for 797 is already in use. global news 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i am lisa mateo, and this is bloomberg. ♪ ♪ we will work with you every step of the way to help you achieve it. so let us focus on the how. just tell us - what's your why?

advancing flight for future generations. ♪ welcome to a new era of flight. get help reaching your goals with j.p. morgan wealth plan, a new tool in the chase mobile® app. use it to set and track your goals, big and small... and see how changes you make today... could help put them within reach. from your first big move to retiring poolside

and the other goals along the way wealth plan can help get you there. j.p. morgan wealth management. >> the more weapons, the more sanctions for russia, the faster

we can get all the capabilities, the faster we will be able to get to peace. jonathon: that was the ukraine ambassador to the united states. good morning to you all. s&p 500 is negative .6%. yields are a bit higher to 3.90 the euro-dollar with the 105 handle. the euro-dollar has been weaker every day of the week so far. we will get to the pce at 8:30. and tons of fed speak. tom: again if we go into next week, we'll get that inflation report.

right now, it's murkier. i want some clarity. jonathon: wow, have we adopted and adjusted with the situation of russia. we are looking at the price and crude at the 70's and 80's and where were we in march? triple digits plus pushing 130? it's a turnaround. tom: one of the highlight of the week was edward morris at city brook and i've never heard him more ambiguous. i've never heard ed morris that uncertain about the outcomes. jonathon: see pfc. if you have access to go through the price forecast. brent will be 74, close to 80. they're still looking for triple

digit crude but that's not the consensus looking out nine months. tom: we heard some optimism from the china reopening. on ukraine, this is an important conversation. in my youth there was a senator from arkansas called senator fulbright. he and oxford did all sorts of things in academics and polluting the fulbright foundation. alina polyakova survived the fulbright foundation. i want to go to william fulbright and folded into your wonderful note which is we are not doing the fulbright war. he said if you're going to do it and if you're not, don't do it. you say this is the forever war. are the allies migrating towards

keefe? >> i heard incredible bipartisan support and with one voice, on this they were clear. we need a win and we want ukraine to win. unfortunately, that is not what we hear from all of our european allies and thus the real problem. we are in the situation where we have given ukraine a drip, drip, drip of weapons but is not enough for them to truly win and take back their sovereign territory. tom: this is really important, fulbright was a critic of our vietnam experience. in the more recent age we have

the forever wars of iraq and afghanistan. are we not used to fighting and doing more? alina: the truth is this doesn't have to be another one of those forever wars. it should not be. the ukrainians have been fighting courageously. they have really gone far and beyond anyone's expectations. we used to think a year ago this was going to be a three day war but kyiv the stands. there's no reason for this to be another multiyear war. it can in this year is about whether we want to help ukrainians enough to get it done. they can get it done, will we be there to help them? jonathon: this is a difficult question but what do you suppose

a nuclear power would look like? we lost the connection there. we have a few minutes left. that is not straightforward. tom: your question goes to thomas sheldon in the nuclear ability changes the outlook? i believe we have the professor back? jonathon: i'll give you the opportunity to answer that again. i don't suppose a lot of people have given this much thought when they talk about winning and beating russia. what does beating a nuclear power look like? alina: i think it's increasingly unlikely and this will sound a little strange to folks.

it's increasingly unlikely they will use a nuclear weapon. we have heard the chinese be very critical of that. we heard that india has been sending signals to moscow that they do not want a nuclear confrontation in russia has to listen to those countries because they are dependent on this country for oil and gas export which europe has completely stopped. the likelihood of that is relatively low. what that means is that we are fighting a conventional war. we thought we would be fighting this 21st century war. this war looks a lot like the last war we fought in europe. and that was a brutal war fought with tanks like we've seen before. the nuclear problem is a serious one to consider. i do think we have done a good

job on that. the objective is clear, how do we win the conventional land war and how do we help ukraine do it? jonathon: you think the european union should be sending them just. do not think there would be a response from russia? alina: we have seen this movie before when ukrainians were asking for patriot missiles so they can defend against the constant bombardment of russian bombs, drones and all of that. it was hitting ukrainians civilians and and or strictures. we sent the systems a few months later, nothing really happened in terms of russian strategy. they have been doing what they set out to do which is to take kyiv and now they're trying to take eastern ukraine. we need to stop thinking less

about what might the russians do and start thinking about what we want to do in ukraine. the jets will have the same reaction. we'll send them and it won't change much on the russian side. jonathon: for a lot of people outside of ukraine, they understand the pain of the ukrainian people. but if there is a risk that could lead to some kind of nuclear escalation, thus not a risk people are willing to take. how do you get the support from western governments to continue with this post? alina: the interesting thing has been there has been overwhelming support from western governments and from the public. in germany, it's been very reluctant over the last year to provide weapon systems. they recently did provide german leopard tanks. the public opinion in germany, the most pacifist oriented population we have in europe

because of the historical traumas in germany. they have been ahead of the german government and wanting to support ukraine. because people understand that if ukraine falls there is no limit to what the russians might do. then you have nato on the path of aggression. you don't have a nato confrontation with russia now. that's what were trying to avoid by giving ukraine what it needs. we are trying to keep this out of nato territories. if russia wins in ukraine it will fill emboldened to go into poland. jonathon: our apologies for this technical issues earlier in the program. tom: april 18 she added immense

value on the black sea. jonathon: equity futures are down .6%. 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.

>> with the fifth time point -- you don't see a labor market that is shutting labor. the benefits of the decline in inflation, we are at the bumpy path and now are we plateauing? >> the turn will be very very quick. this is bloomberg surveillance

with tom keene, jonathan ferro and lisa abramowicz. jonathon: closing out the trading week, live from new york city. i am jonathan ferro, lisa will be back on monday. tom: so she says. she's probably on some beach somewhere and where not. jonathon: i thought she go skiing in the winter? tom: she has a check. -- jet. jonathon: we are down .6%. we will get some fest because well from three well-known hawks on the fomc. tom: master move the market last time. jonathon: they may feel compelled to move it by 50 basis

point. tom: she is prodigious and mathematics. the epsilon is the noise out there and she's an expert on that. there's been a lot of noise out there this week. jonathon: how much is the fed using the information from january and if you get a drip feed of data in february. tom: aaron rodgers, the new york jets. jonathon: if you look at what mohammed is saying a new dovetail what we heard from ed hyman, no wonder he had this cacophony of opinion. jonathon: look at the move in the bond market.

five weeks in a two year yield climate breaching 470 getting closer to 4% on a 10 year maturity. i forget who said it but essentially, the fed is telling you you can get 5% wanted t-bill why would you go anywhere else? tom: that's a short-term view. if you have a six-month t-bill, and six months you have to make a decision. jonathon: thus the investment risk. tom: at new york university, there's a guy who's an expert on the math. jonathon: the question is, is this a once in a generation to lock in yield or is it a new generation of high-yield? tom: what do we do with our traditional portfolio theory out

when we're back to a normal rate structure? jonathon: sebastien page joins us cio t. rowe price associates. you have a phrase that is aggressive defense, what's aggressive defense? >> we play both offense and defense of the same time. the bearish narrative is so strong. the gloom and is really strong right now. the yield curve is inverted by 80, pmi's been dropping like a rock. the l.a. eyes are flashing red. our models show a drop in highs -- house prices. i could go on and on. but markets look expensive. earnings expectations look high. i call it the bearish truck and

it's coming. we are underweight and stocks. we have a cash buffer. we are neutral on bonds because we think they could reassert themselves as diversifiers and a gross shock. where the offense part is being: s&p 600. quality small gaps which are as cheap as they were in the financial crisis and long high-yield, that 9% yield. tom: i want to go to your book, this is one of the great books to read on asset allocation. there's a lot of books that are hot air. it's beyond diversification. and innate you nail how people feel right now where you say something about horoscopes. we are back to astrology within what were doing.

if we have a time where we are looking at horoscopes, do i do less diversification and concentrate and my beliefs or do i over diversify, which way do you go? sebastien: i just presented at the institute and said the macro data is wacky. that's a technical term. if you travel back in time with your bloomberg terminal and go to what the fed fund futures were seeing a year ago they said by now we would be at 1.8%. we are at 4.75%. no economist would have told you that there is a lag between fed hikes and unemployment. but after those bases hikes we would be in a situation where we are out of 50 year low and

unemployment creating 500,000 jobs. it is wacky data and it calls for diversification. tom: i look at what you just said my only answer is, i can hang my hat on free cash flow. how many companies in the s&p 500 have t rowe price quality of cash flow? sebastien: fundamentals are reasserting themselves from here on for the rest of the year. that is my view. we have had a short covering type of rally year to date, even cryptocurrencies rally. i think we're in a situation where going back to diversification. now is not the time to be a hero. you want to have quality investments, quality stocks. you want to have a fair amount of bonds. the yields of come up. we think the 60/40. investors are not trying to

navigate the next 12 months, because we are at a critical time and capital markets history, they are rethinking their strategic asset allocation and the role of bonds and treasuries in the 60/40. one thing you can do is take about 10% of your bond portfolio and allocated to carefully selected alternatives and look for down risk hedging in your equity portion to make up for interest rate volatility. this is an interesting time to be an asset allocator. you have to navigate through this transition of a different kind of diversification. go back to cash flows, i agree with that. re-think your strategic asset allocation. jonathon: a theme for us this week and i know you watch the program, thank you for that. we talked about the fed being data dependent.

the question is how dependable the data might be. response rates to both hide market surveys continue to decline. the economic data is becoming more unreliable and creating more volatility and data and markets. what would you say back to that? sebastien: i would agree with that in the big question is, we have had a good few prints. retail sales 3% in january, that's above expectation. the labor market is resilient and you could say this is good for the consumer and real rages are rising so these potential green shoots, he's good data points of come out. last year, we had consensus to be underweight stocks all year. now, we are starting to have a debate.

the outcome of the debate was that these data points are a try. the bear train is coming and all indicators are flashing red. jonathon: you think it's a bit of a headache -- head fake, the soft landing story. sebastien: if we get anything but a hard landing to me, the quality small caps are priced to outperform. those quality small caps, they are out turning the large cap part of the market. that's an interesting part where you can play. i am not fully gloom and doom. i am not as bearish as lisa most of the time. ultimately, i think you have to be careful, have the cash

buffer, earn the cash and then position for some offensive decisions. jonathon: t rowe price sits around the table and says we are not as bearish as lisa. tom: this is brilliant, thank you sir. jonathon: lisa will have her come back when she comes back. they were talking about the data being unreliable, not the first time we've heard about that. we put out a story about that about some of the surveys, the response rates continue to decline. tom: we are coming out of a medical event and as blanchard

phrases that come at the biden stimulus. i thought your questions were great and i know what you are doing. you're listening him to get ready for the pharaoh report. march 30 first, john is going into a study over the weekend. the pharaoh report is looking at the 274 days. jonathon: it's much more difficult to make the year-round call in year three of pandemic economics. tom: i'm old enough to remember. we used to make three-year statements. we believe and 2026, we used to say that. jonathon: can we talk about tom

leland in this next hour, what a great man, a great thinker. tom: he was original, i think he was a very special guy. keeping you up-to-date with news from around the world with the first world, i'm lisa mateo. the measures will single out russia's defense, energy and metal industries, financial institutions are more than 200 people. there will be more pressure on countries to choose between the u.s. and russia. china is calling for a cease-fire between russia and ukraine in a proposal for ending the war. the plan has little chance of winning broad support. it would offer clear benefits to vladimir putin including a call to freeze russian troops in place on ukrainian soil.

the u.s. and south korea are planning for a potential nuclear attack from north korea. a tabletop exercise was held in washington and focused on hypothetical scenarios of north korea's use of nuclear weapons. it is been building up his ability to deliver nuclear strength. it's a setback to treat covid-19. they have recommended against the use for adults. they will appeal that decision. the billionaire private equity pioneer thomas h lee has died. he ran his boston-based firm. i am lisa mateo, this is bloomberg. ♪ and see how changes you make today... could help put them within reach.

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>> one year on, from the start of his brutal war putin has failed to achieve a single one

of his strategic goals. instead of dividing the european union, he finds us united and determined to stand by ukraine for as long as it takes. jonathon: one year on, that was the european commission president. it's one year's the start of this war with the invasion of vladimir putin into ukraine. good morning as we close out the trading week. equity futures are negative again by a 6%. on the equity market, a third straight week of losses. your 10 year is 3.9062. a little bit later this morning, we get the pce read on the u.s. inflation. tom: seriously folks, we have economic data and an hour and 15

minutes. i want to make a point that europe got lucky at the right time. i know nothing about brussels politics but this is someone who is steeled and german military knowledge. i think most americans don't understand that she had a lot to do with the monetary policy. right now, we will go to maria tadeo and annmarie hordern following the president. maria, always on the job in kyiv this morning. what does brussels want? what does vendor lien want not so much from president biden, but what do they want from their fractious nations?

mariah: what was very striking when you ask people in kyiv who do you like, from the european union. the first thing they say is boris johnson. the other name that comes up is the fonder lien because she was the one who got in here first and presented ukrainians with the questionnaire. the questionnaire he to join the european union which is what they care about the most. in terms of what russell wants for the situation they have made it clear that vladimir putin needs to pull back all of his troops. they have sent a message now that the relationship between the european union and russia has fundamentally change. this idea of peaceful trade has proven to be wrong. the other point of stress is

that and poland, the validation for eastern european countries to say we were not hysterical when we told you that ratio -- russia was dangerous. tom: i have to assess us we go -- we have to ask you about the weather in kiev, it will be 51 degrees. as we entered the mud season, who wins an award? we just heard that this is a real war, who wins in the ukrainian spring? maria: the whole country should think those soldiers at the border because they are really spilling blood to help the country. the reason why i am here now is

because smolinski decided to stay but because ukrainian army has been fighting like hell for a year. i am not sure about the weather but the electricity is back on, they've been able to adjust. we had no blackouts in our hotel. ukrainians are waiting for the completion of the nato training and the weapons they are expecting. they had a wish list of seven items. everything that they have now, they are waiting for it to arrive in big numbers. they are waiting for those leopard tanks which are making their way through poland. jonathon: what i would like to talk about with you it's a situation with china this morning. we talked about the cease-fire proposal that china has offered. i want to reflect on the report from der speigel said a chinese manufacturer wasn't

conversations with russia about selling drones. the administration has expressed concerns about china's involvement in this war. how would they respond to that? annmarie: they would say that this cross is a redline of lethal aid to russia. they have talked about this nonlethal or dual use material that is going from companies in china but they have said they are seeing potentially indication that china will be willing to provide lethal aid. we don't know what the u.s. would do in response just yet but we do know that this is been something they have been concerned about and they want to try to make sure to warn beijing not to cross the line. the second thing is that of china was going to do this, this lethal aid they cannot be these individuals who want to come out as global statesmen and talk about cease-fire proposal because they are obviously only

aiding one part of this. it's a difficult moment for the u.s. and the other thing they would say this that these are chinese companies. chinese companies are one in the same with the chinese communist party. jonathon: we are hearing from the british government they said the prime minister would address the g7 on ukraine later today and rishi sunak would advocate for long-range weapons to be sent to ukraine. how close are we to just being sent to ukraine? annmarie: jake sullivan talked about this, of did come up in conversation but this is more of a long-term conversation with ukraine and that of 16 just would not be suitable for the war they're fighting right now. also what we've seen is the

spanish leadership go to ukraine and many are even weighing the potential for arming them with jets. i imagine f-16s, long-range missiles will be discussed when the g7 says down, to mark this one year on at 9:00 a.m.. it follows on the fact that the u.s. is willing to announce another daily use of sanctions and tariffs on russian as well. this is been ramping up that statement when you're on that they're not committed to the defense of ukraine but they will also penalize russia. jonathon: what happened to the lines in the sand that the u.s. administration and governments were worried about that if they provided certain weaponry to ukrainians it would be escalation? maria: we had a psychodrama, nonstop debate about tanks and

whether that would be perceived as an escalation. the russians have been saying that they're not fighting ukraine but nato. nato will obviously say that's not accurate that they're just providing weapons to a country that is defending itself and it allows for that. the invasion comes from russian not ukraine. the last round of weapons up for debate is the fighter jets. he said potentially, that could come. the one thing that has become clear is ukrainians will stress, nor war has not been one if you don't have the capacity to launch long-range missiles. if you don't control your skies, is difficult to push for a counteroffensive. jonathon: maria, we appreciate it on the ground and ukraine along with annmarie hordern.

we had a proposal from the chinese government earlier today. a 12 point, 65 proposal. tom: what was .8? jonathon: it included a cease-fire. jake sullivan swatting this one to one side saying that the proposal should have ended after the first bullet point which calls for respecting sovereignty of all countries. futures are down .6%. this is bloomberg. ♪ ♪ of up to $26,000 per employee. all it takes is eight minutes to get started. then work with professionals to assist your business with its forms and submit the application. go to getrefunds.com to learn more.

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jonathan: equities softer this friday morning. equities down .6% on the s&p. on the nasdaq down .8% or .92%. we are looking for a bounce. let's see what the data tells us. yields higher on the two year for five straight weeks. your two year 4.72. that is the closing high of this hiking cycle on a two year yield. ultimately we have not been at these levels since 2007.

now we are talking about 6% fed funds. what is the prospect of that happening? much higher at the ecb. let's talk about the euro. eurozone core cpi all-time high. the bundesbank president saying we have more to do. 50 in march and maybe they will make a push to do so again. negative on euro-dollar by .25%. so that jerusha -- subadra rajappa put out a great note with one word, tricky. the case for greater terminal rates is higher for the ecb than the fit hence we expect terminal rates -- treasuries continue to outperform relative to bunds. six months ago to have this conversation on the ecb -- and now that is becoming real conversation. tom: bring this up with mohamed

el-erian when you talk to him. i do not get the gdp experience. subadra rajappa with us now. head of u.s. rates strategy at socgen. the derivative mathematics of society general was invented and invented quantitative finance. she was steep in this at new york university. i want to go to merton who won his nobel prize to continuous functions. we are as disjoint as i think i have ever seen. how disjoint are we? how can socgen do mathematics now given this do we are in? subadra: ultimately you have to look at the long term. looking at market moves day today and week to week will be very occult to predict direction

out -- very difficult to interpret -- to predict originality because there are 70 different factors to take into account. even if you look at our own forecast for last year we moved 10-year gilts -- 10 year yields -- you have to look at the longer run. intra-weaker intra-month will be hard to predict. tom: it is global wall street friday. keep up if you are taking notes. roman friedman at your new york university invented the measurement of hedging. if we are going nowhere and there is a cost to hedging, how long can we keep this going nowhere shall game up before we get a vector that shows actual movement? subadra: it is not like we are not going anywhere. anytime we get more data or more

information we are adding to what we know and informing our decisions based on that. the fed is almost at the end of its rate hike cycle. what we are looking at is to see what the pivot will be. calling the time of the pivot will be difficult but the destination is clear. the fed wants to orchestrate demand destruction. under those circumstances you will see a slowdown in the economy and recession and that to us would mean yields would have to go lower. timing when that is going to happen and when that pivot is going to happen is extraordinarily difficult. for the most part we know what the destination is, we do not know what the journey is. jonathan: we have to manage risks around every view. reading your research, do you think the risks are asymmetric and not that balanced? subadra: for the bond market it feels like the risks are

asymmetric. we are close to the end of the cycle for the fed. yes, the fed might deliver two or three more 25 basis point rate hikes, but after that i think that broadly speaking the risks are yields will go lower. we feel like the risks to the treasury yields are asymmetricly skewed towards the down side as opposed to the upside. this is a very asynchronous environment. you look at the ecb. they have a lot more to deliver. broadly for the u.s. i feel like there is just going to be a wall of cash again when 10-year gilts start getting above 4%. fixed income assets, corporate bonds, even etf's seeing a tremendous amount of inflows into the bond market. i think that wall of cash will

cap rising yields in the near term. jonathan: the title of your note , i was sitting in bed reading your note at 7:00 p.m., i go to bed at 7:00 because we are sat here. -- we are sad here. it is titled tricky. i was thinking about where we were. if you've said 5% fed funds pushing 6% and unemployment where it is and retail sales were that is and jobless claims were they are. i would not have believed it. the same thing with -- only 12 months ago we were still doing q. week in the united states -- we were still doing qe in the united states. what is your take away from how the cycle has gone and what we have not seen, which is monster fallout? subadra: this cycle has surprised everyone in every

country. in the u.s. we are not expecting the fed funds rate to get to 5.5%. it is more shocking for the ecb. you are looking at closer to 4% when it is all said and done. definitely this inflationary environment has been hard to gauge. monetary policy is a blunt tool. the only thing central banks have in their tool chest is to be able to raise rates. as they raise rates it will lead to demand destruction. tom: we have heard the rationalization that says ok, if fixed income prices go lower because now i am earning a coupon which makes the capital loss less painful. all of my radar is up on that analysis. does the coupon save me if we get higher yields? subadra: absolutely tom: listen

to her. see that joy? keep it going. subadra: it is the coupon that really matters. in some respect you are in some sort of a win-win situation in the bond market. either you buy 5% coupon and you are happy with that or you can seat an environment where you see a flight to quality or the fed has to pivot and you see this rally closer to bonds that will bring bond yields lower. the bog spectrum of options you have to invest -- the broad spectrum of options you have to invest -- bonds are your safe haven back. you're getting high coupons and high-yield and you have the upside from a potential rally if there is a policy pivot. tom: if we near the 6% terminal

rate where does the 10 year yield go? subadra: i think the yield curve will remain relatively inverted. you are looking at -80 basis points in two and 10. i do not see why the long end will sell off a lot as the yield curve steepen's unless the fed is thinking about pivoting on policy. this is very much going to be a front end led selloff in bonds. the yield curve will remain inverted for a good portion of this year. we'll be looking to see when the yield curve starts to steepen as a sign of when the fed might potentially pivot. our view is the u.s. economy will go into recession in early 2024. in the later half of this year is when we think the yield curve will start to steepen out. that is the cl will be looking to see to see if there will be a policy pivot. jonathan: it is different for

different people with different risk tolerance and different circumstances. are you advocating for people to buy the 10 year at four instead of the six month at five given the reinvestment risk you think might be down the road as yields drop? subadra: i think you do both. you're looking at high yields at the front end of the yield curve. i would say a lot of investors start looking at 5% or 5.5% returns in the short end. it is very attractive. if you have cash to put to work you would probably want to put it in the gilt market or the front end of the bond market. your above a lot of volatility up to put that money into risky assets. on the long end if you're looking at an asset liability or a pension fund or insurance company, you start getting 10-year gilts close to 4% and that will be very attractive for some of these liabilities.

i think you will see different buyers in different segments of the yield curve. jonathan: well said. tom: for those of you who are not in global wall street, what a window that was to how adults think in the industry. to make this clear, if mohamed el-erian here is that, they are listening to her even though it is away from their economics. jonathan: i think mohamed el-erian is listening to that. tom: subadra rajappa, thank you. jonathan: he goes to bed very early too. 7:00 p.m.. tom: the life that we have, just as a window into it, is really unique. john and i are making jokes about it but we are doing this 24/7. team surveillance is pretty much 24/7. we pretend to have lives. part of it is a comfort we have

to have. jon ferro can do this and get through a long week by the jammies in bed. it is just great. jon got these. jonathan: was at my christmas present? tom: secret santa. jonathan: i would have loved that. as a kid that would've been often. i just had this dream is an eight-year-old that i would walk out onto the turf. obviously that did not happen. tom: i played catch with one of the kids in middle centerfield of fenway park and i burst into tears. jonathan: the same. i would have burst into tears if i did that right now. do know what i was actually reading last night? annie duke. such a great book. fantastic. tom: is what we do.

we will work through the weekend to next week, which will be interesting without jobs day delay. another week of weirdness. jonathan: futures negative. dan 10 about in the studio, up next. leigh-ann: -- lisa m.: it has been one year since russia invaded ukraine. the u.s. and other g-7 nations will mark the occasion by imposing more sanctions on russia. the defense, energy, and metals industry will be targeted along with financial institutions and more than 200 people and there is likely to be a crackdown on those who help russia evade sanctions. pull it will begin sending german built tanks to ukraine today. the polish government has promised to deliver 14 of them. earlier this week spain said it may increase the number of tanks it is sending from six to 10. illinois governor says he is

willing to spend what it takes in the next election to help president joe biden his job. he told bloomberg he wants to keep republicans like donald trump ron desantis out of the white house. he is a member of one of the world's wealthiest families with a net worth of $3.7 billion. american airlines chairman said to his brother directors -- and two other directors plans to retire from the board. it comes over a year after he stepped down as ceo where he oversaw the merger with u.s. airlines -- global news powered by more than 2700 journalists and analysts in over 120 countries, i am lisa mateo, and this is bloomberg. ♪ all... and see how changes you make today... could help put them within reach. from your first big move to retiring poolside

and the other goals along the way wealth plan can help get you there. j.p. morgan wealth management. go. go brain. no, not that one. go this one.

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because it is one year today. but because this invasion increased all of the fragility's of the global economy. jonathan: that was the european commission for the economy and former italian prime minister speaking on the one-year milestone of the war in ukraine after vladimir putin's invasion. equity futures -.6%. in 44 minutes we will have economic data in america and get another reit on u.s. inflation. the so-called pce deflator. in the bond market your 10 year is 3.9062. crude, $76 on wti. given how long this war has, on comp if you told me crude was backed out of $76 12 months ago i would've struggled with that. jonathan: how long did i get ruble dynamics in march and february of last year? i do not have the compare and contrast but i think you are dead wrong.

$83 on brent crude and still people modeled with the china pacific rim reopening a story of up to $100 a barrel. jonathan: comments from treasury secretary janet yellen earlier on. saying u.s. support for ukraine is unconditional, warning that china, if it helps russia provokes consequences. i go back and refer to that report yesterday evening which did not identify sources but suggested there was an ongoing conversation between russia and a chinese manufacturer over providing drones to the country. tom: why wouldn't they provide jones -- provide drones? jonathan: it depends how you look at the situation. if it happens we end up in some form of a proxy war between united states and china? that would be almost unthinkable 12 months ago but here we are. tom: or two decades ago.

on this in a bursary of ukraine we are taking many different tax with annmarie hordern in london and maria tadeo in kyiv. someone who has trained with the federal bureau of investigation on sanctions, on security. he is daniel tennenbaum. he is banned in boston and banned in moscow. what does the next marginal section do? is there such a thing as a marginal section and will have any effect? daniel: today what you will see is a fairly large package of additional designations, additional focus on metals and minerals sectors to print further constrain the russian economy. speaking about this on february 22 of last year, russia is well on its way to becoming another venezuela or iran in terms of economic isolation. these sanctions continue to

constrain the russian economy. what you will see today, and frankly president putin has had a very bad week for a variety of reasons -- is the allies to russia will get more reminders of why choosing that side is not the best choice going forward. tom: i went back and looked one year on from pearl harbor. the new york times fantastic ability to look back at their archives to the civil war. i looked at december 7 of 1942 and all of the agony, including water canal and the pacific and what we will do in the pacific and europe. this is not world war ii because we are so visible. how is your world work given the media immediacy of world events? daniel: right now with the concern around china, any sort of proxy war, especially looking at the global south, you have companies look at where they are operating around the world and where they may be on the wrong side of a coalition of support for ukraine and ukrainian efforts.

you have companies beginning to take another step back, similar to what jeff has been covering at yale on the coverage -- on the companies who have exited. on the flipside, russia has made it impossible for companies to easily exit so they're beginning to nationalize businesses of western companies. this is a situation where the sanctions can further constrain russia but right now you're beginning to choke off the allies helping russia fight this illegal war in ukraine. jonathan: united states has been very transparent about concerns china will provide aid to russia to engage in this ongoing war in ukraine. have you given much thought to what would happen if they did? daniel: yes, although i think the focus for the last six months has been what happens if china escalates tensions with taiwan and what is the market impact on that. it is safe to say that this week for u.s. china relations, you

saw china announce a 12 point peace plan that i think the nato secretary-general unilaterally slapped down today. you saw the u.s. yesterday move 200 troops into taiwan. there is real potential for escalating conflict. i think both the u.s. and china have been measured historically on any potential interaction because of that market feedback. i think china has said the right thing but the material support they have provided in reality it not match the rhetoric in terms of tangible support. jonathan: are you saying the u.s. concerns are misplaced? daniel: u.s. concerns are not misplaced but this as we mark the one you're in a bursary is about putting those who would choose russia over this coalition of over 140 countries going forward and trying to make them understand that if they make those choices there will be economic consequences. what those look like, the designation package that will roll out at 9:00 a.m. will be

large but will it have any major names on it? i would be surprised. jonathan: freed to be effective there needs to be hard consequences. what are the consequences? daniel: u.s. has been a big believer in the stick and large european banks were fined quite heavily for sanctions violations and that helped reinforce the choice for countries to join the iran deal five years ago. when you look at this, there will be a potential cost to companies should they be on the wrong side, but you need to see follow-through on enforcement. without that it is just words. tom: i had my intern maren nightingale do research on the history of sanctions and they go back to 400 bc. is there subtlety to sanctions were you they ban you, you are banned from moscow or whatever, and what we will see from president biden today, it is there suddenly when they break

down, or is it a gradual thing? daniel: is a gradual squeezing of pressure. you are forced to isolate and economy. sanctions are a slow bleed as you try to isolate an economy further. in this instance you have some of the biggest trading economies in the world continuing to prop up russia. jonathan: what does a guy like you do with tractor-trailers or trucks at 2:00 in the morning? daniel: i do not do anything. they are out there. russia has amounts -- has amassed a shadow fleet of tankers trying to move oil fleets in contravention of sanctions. what you do? it is only as good as you can find the bad actors and enforce these penalties to make them realize there is true economic cost. jonathan: let's follow the crude. julian lee at bloomberg wrote a

fantastic story about the crude coming out of russia and where it is going. "millions of barrels of russian crude have been switched between tankers just a few miles off the coast of greece, one of a series of workarounds traders have used to overcome eu sanctions against moscow." what you make of that? daniel: this is where you need to see companies that are found to be perpetrating these acts actually penalized for carrying this out. there are also gaps in the sanctions. this is not the most sanctioned country in the world. russia has a substantial amount of designated entities, but broadly there are a lot of practices that are still allowed. while there is a heavy focus on energy sanctions, there are still certain loopholes companies are trying to use to get around this. you are also seeing this happen in countries where there is no enforcement of eve sanctions and limited consequence -- of eu

sanctions so there is limited consequence? tom: have you seen any evidence there has been a bad actor and we have gone after them? is there some company that screwed up in lithuania when after them or america went after them? daniel: there have been a number of companies designated for helping russia evade sanctions but these will not be companies the viewers of bloomberg will be widely familiar with. that is the point. we need to see known companies put on notice, whether through enforcement or being named and shamed to help drive the point home of what these consequences will be. jonathan: that was insightful. i cannot believe we are here a year on with no end in sight. daniel tennenbaum, thank you. equity futures down .7%. the attention will shift towards economic data in the united states of america. another read on the inflation story in the united states and a ton of fed speak later on this

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>> from the >> the datastream has been undeniably strong on services, on jobs, on retail sales.

consumer strength is resurgent. >> with the data it is hard to fight the fed mantra. >> there has to be a question about whether or not they are tighten sufficiently. >> our economy wants to grow. it needs to break something to get it off those growth rails. >> there is another month or two of choppiness and then you will continue to subside. >> this is bloomberg surveillance, with tom keene, jonathan ferro, and lisa abramowicz. tom: on a friday with interesting economic data. lots to talk about including this one-year anniversary of ukraine. we had great chat with daniel tennenbaum on sanctions. the sanctions is the economic data is what the fed is dependent on. jonathan: 29 minutes away. we are data dependent. how dependable is that data?

responses to surveys have been declining. the next stop for this market is pce data. i picked up on a phrase you used. we are hungry for the payrolls report two fridays away and we'll have one question. will it confirm the strength we saw in january. i'm not asking for another 500,000 payrolls print, but certainly anything north of 300 -- that is going to be introducing the question as to whether this fed has to go 50. tom: that is a two month moving average of 400,000 jobs. subadra rajappa of socgen emphasizing labor economics. at 10:00, you are gone by 10:00. jonathan: you and i are both out of the building at 9:56. tom: new-home shales, and the back story is the new rate regime and the stock after 3.97% is what does housing do as we go

to the jobs report and stagger into march? jonathan: i'm not an expert on the u.s. housing market, far more knowledgeable about the u.k.. tom: what have rates done there? jonathan: it is remarkable hearing people in the united states. i had people turn to me and say 3%, i'm not giving it up. i have 3% and i'm not going anywhere. it will be interesting to see what happens with transaction volume in this housing market given we have a generation of people locked in at pandemic era rates. jonathan: and over commercial -- tom: over commercial real estate you featured the pimco consortium of property. outside of the blah, blah, blah of finance there is real-world ramifications. jonathan: we were talking about residential real estate. we need to talk about commercial as well, and the funds that invest in that.

tom: is a seven year timeline. jonathan: more withdrawal starting to pop up and these financial institutions will have to handle that. tom: let's go to the data. we have a lot to talk about in this hour, getting set for the weekend. the vix, i should have taken off monday, tuesday, wednesday, thursday, nothing has happened. jonathan: thursday was a mess. what did julian emanuel save evercore? he said intraday price action. jonathan: -- tom: intra-versus inter. a huge faux pas is looking within the unit versus outside the unit. intraday. jonathan: bonds down, equities down. when will we snap this? stocks down .7%.

back through 3.90. tom: joseph quinlan joins us, head of the cio market strategy at merrill. bank of america private bank. wonderful to have you here. i am glad i'm not managing money. you are. what have you changed in the last week? joseph: we have seen a capitulation on the part of our clients to go into cash. we realize equities are up for the people we have talked about earlier about the two year yield. they are grabbing that yield. that is what we see. we are still optimistic about looking at 2024 or 2025 u.s. centric. we have a lot of hurdles to clear. the fed being done raising rates, we are not there yet. jonathan: let's talk about opportunities to get out of cash. your phrase.

what is faang 2.0? joe: we came up with that construct a year ago. it is hard assets, whether fuels, agriculture, aerospace, nuclear. when you look around the world there is a premium on hard assets. you are seeing resource protectionism. you are seeing the world fragment in and around resources. this is a good geopolitical hedge. we way to normalize coming out of the pandemic. jonathan: how do you get exposure to those themes? what is the best way of doing that? joe: we have done a lot of work. it could be individual mining companies, etf's. it is a broadly based construct. it is not one single shot.

there are multiple ways you can do that. australian companies, renewable leaders in europe. it is a global basket of leaders in each one of those segments. jonathan: all of this -- tom: all of this is about cash and what you said your clients are doing. i get it. isn't that a contrarian plate looking up one year or what short term used to be, which is three years? joe: we are seeing a lot of folks even go shorter like cds. they want to have their dry powder ready for the other side. a peak in the interest rate cycle. i think a lot of our clients are just waiting it out. they did not buy the january rally. they want to be set up for cash for the equity rebound in the 2024 to 2025. we are seeing the 60/40 come back, that conversation.

i think folks are tired of the uncertainty around where we go next and willing to sit this out and be position for the rally. tom: you are it sound likable signal. what is the percentage of cash people are asking for, not what merrill and bank of america private banks are advising, but what is the comfortable cash you see meeting after meeting? joe: like 20%, 25% at the upper range. some folks are just saying 10%. it is a different mindset because we have had a lot of clients all in on equities for so long and it has worked so well. definitely that cash cushion is rising in anticipation of better places, opportunities with the drawdowns in the markets to step in. we are looking for the recession in the second half of this year. earnings will reset, then we

will start to put the cash back to work in equities into next year and beyond. jonathan: we have had this discussion, you stick at the front end of the curve comedy push it out and take on duration, where are you on that? joe: shorter durations. shorter end in anticipation we are closer to the fed tightening cycle. you brought it up earlier. too far, that is the debate we are having. people are getting comfortable only fixed income and cash again but shorter durations. all it in terms of the asset price. jonathan: this was great. good to catch up. joe quinlan. what was that number? 20% plus on cash positions. tom: the model is 5% is big, 7%

is a statement of cash. typically 2% or 3% cash. elevated cash is 8%, 10%. these clients are saying are you kidding me, move on? jonathan: i will take 5% and move on. morgan stanley saying i would get paid to wait. tom: that was one of the great interviews of the week, brian weinstein of morgan stanley. it is your fault. i am at home watching netflix and i'm not watching queens gambit or wednesday. i am really into formula one. i'm into formula one from five years ago. it is like the titanic, everybody is moving their chairs. we will be there for coverage. jonathan: next weekend. tom: it is early march and i'm reading my magazine. who was your team? tom: my team is aston martin. i watch all of the bond movies

including goldfinger where he change the image of the company. i've to be in there because fernando is driving and he is almost as old as me. jonathan: he is an absolute stud, absolute legend. tom: also these guys are brave. there is a scene in the netflix drive to survive where mr. fernando, i make jokes about him , this guy is a huge rock star come into his car goes directly over another car and he is sitting in the car going over. jonathan: is much safer. they have the halos over the top of the car. tom: aston martin looks good. they have the new really tires. jonathan: it will get so into the engineering of this port. i cannot believe it has broken in america off the back of the netflix series. tom: i have read one article, very british common formula one is steeped in the british heritage. they make no bones about it.

americo was as dumb as would until netflix has it, it is ok. jonathan: it has finally broken this country. did well in miami. i was not a fan of the track. tom: where i really heard about it, the late great ken prewitt gave me -- he went down in flames on this. it was magnuson on another team who won the indianapolis 500 last year. it is not the same as indy. jonathan: i knew within about two months of you enjoying this you would know more about this than i would. dave ricardo should driver aston martin. jonathan: he needs a seat. tom: i cannot fit in the seat. jonathan: those guys are tiny. do know how much strength training they have to do? proper sport. data 18 minutes away. lisa m.: keeping you up-to-date

with news from around the world with the first word, i am lisa mateo. the u.s. and other g-7 nations are marking the one year in a bursary of russia's invasion of ukraine by unveiling new sanctions. the measures will signal out russia's defense of energy industries and financial institutions and more than 200 people. there were also be more pressure on countries to choose between the u.s. and russia. the mayor of kyiv says ukrainians will not give into vladimir putin. he spoke to bloomberg's maria tadeo. >> they will never accept ukraine as an independent country. they thought ukraine was always part of russia. we'd ukrainians do not want back to the u.s. are -- back to the ussr. we see us as part of the european family. lisa m.: ukraine's president will speak about the war at a press conference today. the u.s. and south korea are

preparing for a potential nuclear attack by north korea. the exercise was held in washington focused on hypothetical scenarios of north korea's use of nuclear weapons. north korea has been pulling up its capability of delivering an atomic strike. the billionaire pioneer thomas h lee has died. he ran his boston firm from 1974 until 2006 when it had $12 billion to invest after producing triple digit returns on some of its deals. his best-known transaction was the 1992 takeover of beverage maker snapple. he was 78. global news powered by more than 2700 journalists and analysts never -- i am lisa mateo and this is bloomberg. ♪

this is ge vernova, helping generate and move the energy that our world needs. ♪♪ welcome to a new era of energy.

>> we cannot take our freedom for granted. freedom is not for free. we must fight for it every day.

today it is the ukrainian people who are bravely fighting for their freedom. despite a dark year of despair and instruction, their determination and courage will no doubt prevail. jonathan: one year on from the start of this devastating war in ukraine after vladimir putin's invasion. that was the nato secretary-general. we are 14 minutes away from economic data in the united states. mike mckee will break that down when it drops. futures are coming in, equity future softer, down .8%. session lows on the equity market. yields near session highs. 4.74 on the two year. your 10 year through 3.90. dollar strength again. euro-dollar negative for a fixed-rate session, down one third of 1%. tom: the nasdaq down 1% as well.

we are taking great pride in the titanic effort of our booking team to bring you experts on ukraine. i speak of the generals of the american military. thank you so much for joining us. people in diplomacy such as ambassador haas and we move that forward with the advisor to ukraine's defense minister and is steeped in the diplomacy linkage to military effort, from diplomacy to attack and defense. thank you so much for joining us today. it will be a spring war, it will be on the ground in mud. how do you foresee the tanks will be utilized? >> good morning, tom, and thank you for inviting me. we have said along time ago that with the courage and determination of the cranial armed forces and with the help

of the military assistance we received from our allies we are able to stabilize the front and we are now getting ready for our counteroffensive which we hope will begin soon. because our military objective remains the complete de occupation of ukrainian territories and restoring peace in ukraine as well as europe. the tanks which will be provided by the tank coalition will be instrumental in helping the ukrainian army breakthrough the defense lines of the enemy in the temporary occupied territories that we are seeing the first tanks are already on their way. and we hope the tank coalition will continue stepping up their efforts. tom: to move out another year in this terrible war, can those tanks drive to crimea? do you perceive a linkage of what kyiv once on crimea with

want the allies want on crimea? yuriy: i think kyiv and the allies are aligned when it comes to the situation with crimea. everybody recognizes crimea is an internationally recognized territory of ukraine which is been illegally annexed in 2014. when it comes to the format in which crimea will be returned to ukraine, our military will take that decision when it comes and most probably it will be a mixture of diplomatic efforts as well as military. jonathan: i appreciate your insight on how close we are to the west providing jets to ukraine. do you think we are approaching that moment? yuriy: we are pushing for the fighter jets on a daily basis. our minister of defense, our president, everything from the military leadership. we understand these are sophisticated platforms that require the training of pilots and crews and require logistics. it is not going to happen

overnight but we are doing everything we can to facilitate this process because fighter jets are the last remaining hurdle and they will be instrumental to helping ukraine achieve victory which we hope will be this year. jonathan: how long do you think that will take to train pilots and make that kind of thing operational? yuriy: we are in a different situation. ordinarily training pilots takes about a year if not more. we are in a situation where we already have pilots that have battlefield experience and our pilots are ready to be trained. in three to six months they will be ready to fly. tom: it is simple. you need material. as i asked maria tadeo an hour ago, tell me about the manpower of your defense ministry. do you have enough soldiers? it always comes down to infantry, doesn't it? the state of the ukrainian infantry.

yuriy: indeed. our armed forces, we have sufficient reserves. the reason we are in a better position than our enemy, whose military capability has been degraded ukrainian armed forces significantly is because we are not using our soldiers as cannon fodder, we are not using them in meatgrinder tactics. we are fighting a smart war. we take smart decisions and this allows us to train a sufficient number of troops and where necessary we mobilize more people. for now we are ready for any development and we are ready to continue the de occupation of ukrainian territories. jonathan: -- tom: give us an update on the black sea. discuss the state of the black sea as you enter your two of this war. yuriy: as you know the black sea , there is the russian black sea fleet in crimea.

russia continues to control what happens in the black sea. we will continue building up our military capability and this is why we are asking for long-range missiles because they will be helpful in terms of helping us achieve our objectives deeper into enemy territory and making sure the black sea is safe as well as things like great deal and the supply of agricultural products from ukrainian territory, which was off the international community for a long time. jonathan: united states has committed tens of billions dollars to support ukraine and the war effort in your country. there is some concern about the misappropriation of some of those funds. how are you allaying some of those concerns? yuriy: we are implementing the procurement systems, which are of beto standards. these are the same -- of nato standards.

these are the same system used by every member country. the ministry of defense is open and always welcomes our counterparts from different allied countries to minister and see it for themselves. everything we received go straight to the battlefield and is used efficiently by our army. when it comes to transparency, we are open, we are introducing new standards, new naval standards, procurement mechanisms, and we can guarantee our allies that nothing is misappropriated and everything is going to be used on the battlefield. jonathan: is an incredibly difficult time for your country and on the one-year milestone we hoped we would not approach we have landed on. we appreciate your time for joining us. thank you. yuriy sak, advisor to ukraine's defense minister. unbelievable one year on. tom: that was a great report. thanks to our booking team for bringing him in.

these are the people i want to talk to who are experienced with military. i go back to chilling conversations particular with the general of the u.s. army and he and mark kimmitt work he did about keep the war out of the cities. the biggest fear for ukraine and the allies was building to building combat and we have pretty much avoided that in this first year with the russian devastation. jonathan: just news on those battle tanks, sweden to send tanks to ukraine according to the prime minister. more and more of those headlines from europe. tom: they're all coming out today. jonathan: the request for the chest, you heard what he said. typically it would take anywhere from a year plus to train pilots. you wonder if we do cross that line, which would be remarkable, how long it would take for that to be operational. tom: what we have to do, whether we look at the economics forward or the emails i have gotten on aston martin.

it is tough. mike and i were talking the break about sterling loss in 1959. it was amazing. michael: those were the good old days. tom: 150,000 people were there. jonathan: everyone wants to get into f1. i love lewis hamilton. he is an absolute legend. michael: did you know lewis hamilton is the part owner of the denver broncos? tom: i did not know that. jonathan: michael mckee knows more about sport than you and i put together. economic data just around the corner. futures are lower and yields are higher. this is bloomberg. ♪ -hey david connect with an advisor to create your personalized plan. -let's find the right investments for your goals okay, great. j.p. morgan wealth management.

jonathan: michael mckee alongside us in the studio. that means economic data seconds away. equity futures lower .75% on the s&p. yields higher on the 10 year. on the two year up to four basis points. through 390 -- 33.90 on the 10 year. economic data dropping right now. michael mckee, still waiting for the trip feed of that communication. michael: we have moved to internet distribution and it is not as quick as we would like.

we are waiting on personal income and personal spending. personal income up .6% in january after a .2% gain in the initial release in the month of december. personal spending up 1.8%. that is better than the 1.4% expected. pce numbers, inflation numbers on a month over month basis up .6%, bigger than expected and much bigger than the .1% we saw in december. the euro over your number for the headline is 5.4%. we were at 5% so we bounced in the wrong direction. the core up .6%. that is two ticks higher than december and puts year-over-year at 7%. inflation stronger. personal income is stronger than it was in december and not as

strong as expected and personal spending is up 1.8%. americans are still out there spending. i bet you have some movement in the market. jonathan: i bet you can guess where it is. equities down on the s&p a little more than 1%. in the bond market yields up five basis points. 4.75. that is the highest level we have seen since 2007. on the 10 year 3.93. yields up, stocks down, upside surprise again on inflation data. not what we wanted to see. tom: i am trying to impress mohamed el-erian by doing the math in my head. on the core deflator the previous statistic was 4.35% and the data with revision is 4.65%. 4.35 percent up to a reality of 4.65%, to me that is a

demonstrable move. jonathan: if the fed had the january data on february 1, with that meeting have been much different? michael: i suspect it would have been, especially seeing the strength in the jobs report, which came out two days after that meeting, and if they knew where inflation was going they might not have done 25. they might have done 50 again if it had come out that way. let me give you a couple more numbers. a lot of talk about people going into debt to keep the spending up. the savings rate rises to 4.7% from 4.6%. the second consecutive increase. it looks like people are still saving something instead of just buying everything on credit. tom: what does it say to nominal gdp? what does it say to the animal spirit companies have to adapt to?

inflation can be good for companies because revenue comes in better. michael: absolutely for companies, as long as they are making it on the margins and raising prices faster than expenses, that helps them. that was one of the foundations of the stock market for years until we got into this low-inflation environment and that is one reason it has been harder for companies to keep up the kind of growth they used to have. jonathan: got any mail in response to this economic data that it should be said there should be called the core inflator. tell your audience what is the greatest distinction between the cpi data we had a week or so ago and the pce core deflator? what is all of that? michael: pce you can just call it. they use the pce numbers to adjust for inflation. this is why they call it a deflator. it could be easily called and inflator.

the biggest differences are in medical care. the cpi is what you pay for medical care and the pce takes in what insurance pays as well. housing is a much smaller component of the pce and it is of cpi so that does matter. i am looking to see if we have an update on the number that does matter, which is the core services ex housing. let me type this number and see what we've got. it has not updated yet. we will continue to look for that and we will talk about it on your show. one thing i can tell you is wages were up a huge amount in january. this is not totally unexpected because that is when everybody gets there raises. they were up .9%, which follows 8.4% gain.

-- which follows a .4% gain. the one we will want to see is social security because of the big increase in cola this year and security payments went up 9%. that will be one of those graphs that breaks the graph like we had with jobless claims during the pandemic. that is where a lot of this increase in incomes comes from in incomes were lower than people thought they would be. jonathan: this was great and we will talk about in the next hour. equities down 1.1% on the s&p, down 1.5% on the nasdaq. yields higher on the two year, up five basis points. the 10 year 3.92%. in the next hour, mohamed el-erian for the hour. you can chop by. tom: come join us. jonathan: will also catch up with kate moore of blackrock.

all of that coming up the next hour. tom: very good. we will march forward with the perfect guest. it is time for a brief on the theories that are out there. vincent reinhart has lived them at the federal reserve and he goes -- he knows going back. i know you remember the paper we already in november 2021 from lubbock and williams and the modern theory is founded on our star in that first effort i recall measuring the national rate of interest. do we have a clue of where this theoretical foundation is right now? we know where our start should be or is? vincent: the concept goes back to a century ago and the answer is we have not made a lot of progress in the 125 years since. we may have gotten a little bit

more sophisticated on the technique. it is hard to tell. the basic story is working out or close to potential for the last couple of years. the real rate was negative. must be the equilibrium rate was low. that is one way of estimating it. that is how lubbock and williams does it. tom: let's move farther back with the certitude you had with chairman greenspan that somehow labor and inflation were linked. are they? vincent: we care about the super court because of the link between wages and inflation and resource use and wages. tom: i think we are having some trouble. we will try to get that back.

we will get our linkage set up with mr. reinhart begin if we can. -- mr. reinhart begin. -- mr. reinhart again. i am going back to the theories that are out there. when you're in the press conference with chairman powell there does not seem to be a discussion of foundational theories that vincent reinhart helped form. how blind are they flying? michael: they are flying reasonably blind. they have updated the basic model they use to try to take into account some of these new factors. the pandemic through all of the calculations off because you do not have a recent history. they are trying to figure out as best they can. anecdotes play a much bigger role now as all of the regional fed bank presidents talk to ceos and try to figure out what is going on. tom: we will stop on a friday

and we will let vincent reinhart go because of the audio difficulties in stay with michael mckee. vincent reinhart and mohamed el-erian coming up who has been away from transitory along with larry summers and others is this massive debate over where is our start and where will it set? as you read all of this literature, who is winning the battle? people who think we will get back to what we used to know or will he have a new regime with higher interest rates that affect all of our listeners and all of our viewers? michael: is a demilitarized zone. it will become one of the major topics of conversation as the year goes on. we will hear a lot about it by jackson hole. the question is do we go back to the old normal, do we go back to mohamed el-erian new normal, or is there a new new normal. where does our star go?

we should explain the potential growth of the economy, the growth rate of the economy that does not produce inflation, how high can we go. the feeling is it has moved up a lot right now. does it stay that way or does it ebb away? when you're trying to hit a number you can only divine in hindsight it is hard to do but it is starting to become an issue. there is a paper by the folks at jp morgan suggesting our star has passed. tom: i read this paper. this is a heated debate and it is a combination of people thinking about it. for our listeners and viewers, they do not care about our star, they have mortgage rates, they cannot afford to stay in a hotel, they are looking at tuition up 6%. what does it mean for the viewers? michael: i would put this in the

terms of what will rogers said about congress. you do not want to see the sausage making going on. how we figure out how far the fed wants to go, whether you are on the outside or at the fed? one of the questions you have to ask is at what point are interest rate so restrictive it starts to slow the economy? you do not know at that point is so you're looking for this magical star. tom: michael mckee will dive into the data. tons of data. i am interested in the housing data we will see at 10:00. i am focused on what does this mean? 6.9% mortgage rates. it is going to change our world. stay with us, this one-year remembrance of the war in ukraine. this is bloomberg. lisa m.: keeping you up-to-date with news from around the world with the first word, i am lisa mateo. one year since russia invaded ukraine and the u.s. and other

g-7 nations will mark the occasion by imposing more sanctions on russia. the defense energy and metals industry will be targeted along with financial institutions and more than 200 people. there is likely to be a crackdown on those who help russia evade sanctions. poland will begin sending german tanks to ukraine today. the polish government has promised to deliver 14 of them. earlier spain said it may increase the number of tanks is sending from six to 10. taiwan is emphasizing their no u.s. troops stationed on the island. that comes after the pentagon says it planned to increase its presence there. it was the latest sign of washington's willingness to raise tensions with china. a washington official said the u.s. is increasing at small contingent of troops in taiwan. erickson will lay off 85 hundred people around the world in a cost-cutting measure. the swedish telecom equipment maker employs about 105,000

people. in december erickson said demand was slowing in some markets, including north america. it laid out a plan to cut 860 $5 billion in costs by the end of this year. goldman sachs says investigations and inquiries into its credit card business has expanded. the firm says other government agencies are involved, not just the consumer financial protection bureau. last year goldman said the cfpb was looking into how it resolved bills and processed refunds. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. i am lisa mateo. this is bloomberg. ♪ we will work with you every step of the way to help you achieve it. so let us focus on the how. just tell us - what's your why?

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non-housing services look to be running way above target level. i think the chances of a soft landing, which look to be getting better a couple months ago, i think they are now proceeding a bit -- they are now receding a bit. tom: on the one year in a bursary of the war in ukraine me may be looking at the war in the financial markets as well and lawrence summers has been a winner. he has been a pinyon a. -- he has been a pinata but the economist from harvard has killed it with the idea of what we are living. to recapitulate this look for mohamed el-erian with jon ferro in the next hour. to synthesize this coming i am thrilled he is with us, cameron crise's head of macro strategy for bloomberg and all we do. i will go back. i believe it was four days ago

where the chief economist of goldman sachs really adjusted and said we are going to see sequential measured rate increases. we got the jan hatzius out common four days. the swap market signified three rate rises in a row. what will that do to our listeners and our viewers? cameron: it probably means that whatever assets they have, the price will adjust down further. the key question henceforth is is three going to be enough. you can make an argument that some of the hot january data we have seen is payback from december, which as you probably recall was impacted by adverse weather across much of the country. we probably need to see more

data in february and march to get a real sense of the underlying trajectory of the economy. that being said we have had revisions the inflation data. the price level is higher than we previously thought a few weeks ago. the fed does clearly have to keep taking a hard look at this stuff. tom: the disinflationary crew looks at a three-month than annualized set of series. they look at goods disinflation and say services will follow. do you agree with that theory? cameron: in the fullness of time, but how long is the fullness of time? i would note that in the day we just had released if you look at durable goods, not food or not energy, we have durable goods prices rising .3% after having fallen for the prior three months. that looks like a bit of a phase

change from the immaculate disinflation a lot of people are using to justify paying whatever price they wanted for financial assets in january. it probably is not going to be as smooth a path down to 2% as many people had thought. one of the questions is the fed's estimate for core inflation by the end of the year is higher than the private sector. where do we come out vis-a-vis the private sector. tom: cameron crise with us on radio and tv. the nasdaq down 1.8%. futures down 51. dow futures down 366. the yield moves higher but more quiet since that i thought. i was looking for 3.96. we are not there yet. i look at all of this and then i

guess i will go to cash kirby sophisticated and go to three months or six months. to they follow the terminal rate game higher? can you see them branching out up to 5.5%? cameron: if the fed hikes rates to 5.20 5% to 5.5%, which would put the effective funds rate around 5.33 or something like that and keeps it there for the rest of the year, the t-bill market will follow. it might trade a little bit below the effective funds rate, but we will get t-bills at 5.25% or so. that looks pretty good. i think it is particularly an impediment to the specious quality of assets that have been

so popular in the zero interest rate world with infinite discount factors. we may have to go back to the world where the discount factor in the future is positive. tom: that is the key point in all of this mathematics. what we write about this weekend for bloomberg? cameron: today i am writing about how the equity market has chosen a more favorable way of looking at index earnings than they used to. always looking on the bright side of life. next week we will start looking ahead to march. payrolls is released a week later than it normally is. a couple of days after that you have cpi. when we are as data-dependent as we are now, it is a never-ending cycle waiting for the next

employment data, waiting for the next inflation data. it is never more than a couple of weeks away. tom: it keeps us going. cameron crise, our macro strategist. we turned to michael mckee. i want to bring up a quote. michael mckee and i are the only ones in the planet that remember this. we are looking back 22 years to a seminal paper, this is lubbock and williams. we show that policymakers miss measurement of the natural rate of interest can cause a significant deterioration in macroeconomic stabilization. could they have written that tuesday of this week? michael: they could. the only problem is we do not know if they have mismanagement or not. we do not know what the natural rate is. they suspended the lubbock williams series during the pandemic. we do not have an updated version. tom: they will bring us back as

we come out of the pandemic. the theory at the mathematics are being tested. you said to we need to get used to a 1970's or a pre-paul volcker rate regime? michael: it will be a big discussion today at the chicago monetary policy forum. tom: is that today? i was not invited. michael feroli, ban him forever. michael: michael feroli one of the authors of the paper being presented today. it is a topic of discussion. i wanted to mention we got the numbers for the core services x housing. this is what matters to the fed. what we are looking at is a .6% gain during the month which is crazy. a lot more than people anticipated it would go pop. we are -- it would go pop. -- it would go up.

the total number now over 6% for the gain on the year over your number. 4.6% for the year-over-year and .6% for the month. though show core services x housing still accelerated. tom: at the minimum has not turned down. goods has turned down. services has to get back to a normal three. michael: not so fast. this is the interesting part. the core services ex housing which is jay powell indicator he is watching, but durable goods prices were up 5.5% while services prices were up only .6%. at this point the goods price deflation we saw has started to

level out or go in the wrong direction, which is part of the reason we are seeing these higher numbers. tom: what is housing going to do? michael: it looks like it is going to stall. tom: stall? i was reading in the west it is more than installing. michael: today we get new home sales and that will be difficult because you have a lot of rebuilding from hurricanes and fires and snow. we are seeing a deterioration in housing. tom: michael mckee, thank you so much. michael mckee's day will continue and you have to continue with us on radio and tv. let me get up the screen. mckee . it tells you new home sales are coming up. out of ann arbor they will come out with competent statistics michael mckee says are somewhat important. it has been an extraordinary week.

stay with us on bloomberg radio and bloomberg television. good morning. ♪ it's easy to get lost in investment research. introducing j.p. morgan personal advisors. -hey david connect with an advisor to create your personalized plan. -let's find the right investments for your goals okay, great. j.p. morgan wealth management. the eagle has landed.

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>> the wrong kind of trading going on in the u.s. right now. a countdown to open starts right now. >> everything you need to get set for the start of you is trading this is bloomberg the open. with jonathan. ♪ jonathan: live from new york counting on inflation data