>> welcome, i am john heilemann with first word news. russia says it will take a close look at china's proposal on ukraine, but a crimson -- criminal spokesman says there is no reason for the conflict to shift course. ukraine and its allies rejected the chinese initiative as unexpectedly bias toward russia after beijing announced it last week. after more than a year of post-brexit wrangling, the u.k. and e.u. reached a deal on northern ireland. it comes after a meeting between the european commission president and the prime minister. sunak sought to dial down tensions with the eu since

taking the position in october. you can find the comments on bloomberg. president biden faces a big obstacle in his bid to slash the student debt of more than 40 million people. a u.s. supreme court has repeatedly thwarted his agenda. administration claims it is doing what president trump's team did in 2020 when it eased loan payments during the pandemic. a high-profile democrat is jumping into a u.s. senate race in michigan. she is running for the seat that will open when the democrat retires from the senate next year. the former cia intelligence officer is coming off the third-most expensive house race last year. democrats are fighting to hold the senate seat to maintain their majority. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries.

i am john hyland, this is bloomberg. >> welcome to bloomberg markets. sonali: we are going to get a quick check on the markets before we get started, looking at the s&p up about 6/10 of 1%. off the session lows, still higher on the day, hovering around 4000. the nasdaq 100 is up more than that because it is a yield story. the tenure is down, just off of last week's highs. the dollar is cooling off in conjunction. amber: let us take a look at individual movers, union pacific has an activist nipping at its heels and has gone swift results. the ceo is out, they are looking for a new one. could we see the return of big biotech? possibly. reports are pfizer is taking a look at the big rally. they are rallying on what was a

disappointing set of quarterly results, but they had a positive outlook. with 30% of the shares outstanding, maybe that is all that matters these days. sonali: absolutely. and all that matters as we watch some of the names is that many central bankers have tightened policy around the world. inflation remains sticky. >> i want to be clear, we are not yet seeing inflation going down to target fast enough. central banks need to stay the course until we are comfortable that price stability is returning. sonali: for more insight, we are bringing in peter orszag of lazard. during the obama administration, he served as the director of the office of management and budget.

what a great person to talk to. both about the markets, the impact of higher interest rates. when you are talking to clients across corporate america in the globe, how are the rates impacting them? peter: this is clearly the central story. going forward, it is going to be how quickly does the disinflationary process play out , because that drives liquidity in the market, it drives rates, a sense of optimism. so this is the fundamental driver of a lot of those discussions. sonali: how much trouble are some companies in right now? to what extent are you seeing restructuring talks pick up, but also the possibility of bankruptcies into the end of this year and early next year? peter: there is some of that, obviously there is a waiver of refinancing expected as we move into 2024 and 2025. right now, most of the

discussions are about how quickly inflation will come down and what implication that has on the rates environment. while there are a lot of discussions, have not quite gotten to desperation level, but the conclusion that we are going to hit this wall in 2024 m 2025 really hard. that is still an open question. amber: how do you think about analyzing how that will play out? what data points do you look to? what kind of color are you getting from ceos and executives on the ground that are trying to figure this out? peter: look, stepping back for a second, we have clearly had a significant degree of disinflation. last week was a step back from that, in terms of personal consumption expenditure numbers in the united states. but this is never going to be a linear process, it was always going to be some steps forward,

some steps back. the big question is, comes back to the same fundamental debate, which is how much of this inflation that we have seen the past couple of years really had to do with the pandemic, which is now easing, including on supply chains and, a lesser degree, the labor market? and how much had to do with other factors, including the degree of covid relief and fiscal support that was provided? because to the extent that it was mostly the pandemic and that is easing, monetary policy is really not the right thing to attack it with. there is the open question of how much do you attribute each factor? look, there will be an important report out march 14, the consumer price index for february. that will be another big missing puzzle piece in this debate, but i think that is the fundamental debate. again, to the extent it was mostly the pandemic and things

are easing, disinflationary process will continue to decline to the extent the other factors will need more monetary policy tightening to slay the inflation dragon. sonali: inflation dragon. it is definitely roaring. but what about the fiscal pressures otherwise? there was a great demand after covid to put a lot of money into the economy, to the extent that we see a slowdown. you also have a lot of infighting in washington about the state of the national budget. one of your peers, jim mills, did the airport -- map for us on air. -- math for us on air. it is in the hundreds of billions of dollars. how does that add to the complications about mapping up the path forward for the u.s. government? peter: what i say about the u.s. government is we are in an environment where inertia is going to be the dominant factor,

because of the degree of polarization across parties and the fact that one party does not control the white house, house and senate. the long-term fiscal imbalance, frankly, still comes down to the same things that were always the case. emma graphics, how quickly we are aging, health care cost inflation, in particular, and also the interest rate, which is crucial. those three things basically define -- it is not fraud and abuse, foreign aid and other things people talk about with regard to the budget trajectory. those three factors really determine the path of that as a share of the economy. what i would say now is, more important than any of that over the next few months is what will happen on the debt limit in the u.s. we have a major opportunity to shoot ourselves in the foot by not addressing the debt limit in a noncontroversial and

non-dramatic way, and i fear that we are not on a path to doing that. we could see a lot more drama in the treasury market over the summer, as this looming problem is not addressed. that is separate in my mind from the long-term fiscal imbalance the country faces. amber: what would be the consequence of that? consensus is we might get an 11th hour issue, a deal ultimately will get done. do you think they are not been cognizant enough of the chance that with the polarization that is taking place within the republican party, that scenario might not play out? peter: well, what i would say is nothing good is going to come out of drama on this, even if there is a last-minute deal. there is still the buildup to the moment that will create shocks we do not need. this time might be different, i hope i am wrong. there are two factors that are

different this time, relative to previous cycles of debt limit negotiations, many of which i was unfortunately involved in. the first is the one you mentioned, the parties are more polarized today than they were in the past. to be frank, it is not entirely clear what some of the members of the house that are raising the issue around the debt limit, what exactly it is they want in order for the debt limit to be raised or extended. the second difference is the treasury market itself is less liquid than it has been in the past, so any tremors of concern over this will have a magnified impact, relative to some episodes in the past, just because of the reduced level of liquidity in the treasury market. sonali: before we let you go, real quick. what does the pipeline look like? peter: i'm not going to comment on our pipeline, but obviously

you are seeing a significant amount of activity among strategic and private equity, coming back into the marketplace. a lot of that, in terms of whether the deals are consummated, will come back to where we started with regard to the disinflationary process. if that continues, there is some hope the fed tightening -- there is a clear line of sight in terms of when that is over. there is a lot of pent-up demand. the underlying drivers of mna in terms of technological change, the energy transition, post-covid realignment of supply chains and so on -- all of those are still there. they are waiting for the right moment to manifest themselves. sonali: thank you for your time, that is peter orszag with lazard . coming up, threadneedle founder joins us. this is bloomberg. ♪

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sonali: this is bloomberg markets. u.s. stocks are rebounding as traders absorb mounting evidence that the fed may stay restrictive. apollo's stock is noting those trending into the market risk are falling into a bull market trap, saying quote a generation of investors has since 2008 been taught they should buy on dips, but today is different because of high inflation and credit markets and equity markets are an estimate in the commitment to getting inflation down to 2%. we are a long way from that. for more, we are joined by ann berry, founder of threadneedle ventures. do you think people are too soon to buy the dip because of what they've been trying to do the last 10 years? ann: this is not a date, do not

buy into it. i agree this is not the time or way back into the market. amber: what does that mean in terms of the multiples that people are assigning to the public markets right now? it looks expensive, relative to history, relative to the bond market. but does it speak to the fear, the fear is bigger when it comes to missing the next 10% higher versus enduring the 10% lower? ann: to hone into the point you made it, when you look at the math, yes. equity markets right now are trading, at least the s&p 500, roughly 9% to 10% premium, to what the average from 2010 onwards, prior to the bull market during the pandemic was. that is expensive premium pricing in a world that is fundamentally deeply uncertain, not just when it comes to geopolitics and a mystic policy. the idea is equity risk premium is now the lowest it has been since 2008, when some of the macro uncertainty is some of the

highest it has been since the great financial recession is baffling to me. sonali: i want to talk about the consumer more, you have a lot of expertise in this area. if you think about the pressures they are feeling regarding inflation, let us pull this up. you do not see it the market. consumer discretionary in the s&p 500 has got a heck of a delta to stables. you think a lot of that is tesla speaking. what does the trading in the consumer sector show you about the bubbles that might still be in the market? ann: bubbles is the word, i am glad. the last couple of weeks, the headline that has been saddening to me is talking about the rise in consumer credit spending, the tagline has been the consumer is strong. no, the consumer is taking it even more debt to pay their bills at exactly the moment when the cost of serving that debt is going to continue to go up. the fed has been completely clear, rates are going up, the

consumer is going to weaken. sonali: how do you play the disparity? ann: here's what i am doing, this is just one person's view. i will disproportionately continue to hold cash and clipped the 5% plus, that is the safest form of bonds. you stop buying corporate bonds, it is even more attractive. where i am seeing opportunity is public markets, private consumer tech markets. amber: let us talk about that. we hear a lot about down rounds in the private market. from your experience, how pervasive is that? what deals are you able to get that were not available the past couple years? ann: it is starting to happen, some really big headline grabbers. strike is famously seeing down, another in fintech. i have seen multiple opportunities come across my desk since the top of the year, down rounds of as much as 75%, relative to last evaluation

rounds in late 2021. the opportunity set is there, i think good companies will be able to raise with more moderate down cycle valuations. but the private markets are beginning to catch up with where the public markets amtek -- and tech were for the end of last year. amber: does that apply to ai you see in the private market? ann: ai is interesting, it has quickly become the new metaverse. it is an overused term, poorly defined. it is being used as a prop by a lot of public companies, in my opinion, to try and forge a vision of a path of growth without it being clearly articulated. i am seeing bubblelike valuations around self described ai companies in the private space. for the most part, they are where they were before. amber: thanks for that perspective, that is ann berry from threadneedle. time for the stock of the hour,

we are looking at best buy. they cut the electronic retailers estimates for the fiscal year and shared that there might be a further decline in the near term area in italia is joining us now, what is at the heart of some of the pessimism going into the quarter? natalia: an analyst says he likes the company, he likes the management. the execute really well, the company is a good cash flow generator. at the same time, there are things they cannot control, such as consumption. especially consumption on big-ticket items. analysts will keep an eye on it, we heard from walmart and home depot. they provided a cautious outlook. they cut the price down to 83 from 88, the consensus is same-store sales will be 10% -- -10% for the fourth quarter, they expect more pressure in the near term. in terms of margins, they were

weaker last year because the company had to run lots of promotions to keep consumers. we also saw lots of supply chain issues as a result, margins were weaker. what is different this year is we are seeing an improvement in supply chains, freight costs are lower. it can be a positive impact for margins, but it will take time until we see it. sonali: what does this mean for 2023? is there a better outlook for electronic consumption moving forward? natalia: on the one hand, consumers keep spending. we saw higher-than-expected consumption and retail sales numbers. but consumption is not equal across all areas. electronics consumption, it is still weak. there was a big boom on electronics consumption during the pandemic, companies such as

best buy really benefited from that. but if you bought one computer, it is unlikely you need another one right now. it is highly likely that consumption of electronics will be under pressure during the first half of this year, but analysts i spoke with expect some relief in the second half, probably fourth quarter of 2023. amber: thanks to natalia kniazhevich, joining us on the best buy story. coming up, toronto dominion set to pay big bucks to settle claims over allen stanford's $7 billion ponzi scheme. we have the price tag next, this is bloomberg. ♪ - super excited to open up my diploma from southern new hampshire university.

- i'm nervous. i'm excited. (paper ripping) - [speaker off camera] okay, let's see it. let's see it. - oh my gosh! - jesus g suarez. i did it and it's here. - [speaker off camera] yeah! ♪ - [narrator] next term starts soon. visit snhu.edu. [office sounds] ♪upbeat music♪

♪♪ ♪when the day that lies ahead of me♪ ♪♪ ♪seems impossible to face♪ ♪a lovely day (lovely day)♪ ♪(lovely day) (lovely day)♪ ♪(lovely day)♪ a bank that knows your business grows your business. bmo. amber: this is bloomberg markets . now for today's for what it's worth, today's number is 1.2

billion dollars, that is the amount td bank agreed to pay to settle a lawsuit by investors, claiming it aided allen stanford's $7 billion ponzi scheme more than a decade ago. stanford is serving a 110 year sentence for fraud and money laundering, there is a lot of interesting threats to this. -- threads to this. the fact that it took 10 years for some to see justice and what it means for td when in canada, there is increasing scrutiny on regulatory capital. there analysts to think maybe to make up for some of the money it has to spend on the settlement, you could see td sell down further its stake in charles schwab, which it owns 12% of. sonali: they are not the only ones that reach settlements, independent bank will also pay. much less in terms of dollar

amounts. you look at with the lead attorney said for the receivers, they say this is nothing short of monumental. amber: absolutely. the caveat that, or on the others, there were concerns that today they were supposed to go to court. if this was going to be drawn out, there were some straight figures or whispers that they could have been on the hook for something worth $4 billion, so that is part of why we are not seen such a strong reaction in the shares. it is coming at a lot lower, still significant chunk of change for td bank area -- bank. sonali: it is significant. on another side, we have their earnings coming up later this week. a big week for canadian bank earnings, let us see where they come into perspective. we hope to be with you again soon, amber. amber: absolutely, thank you so much. sonali: that is it here in new york. this is bloomberg.

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romaine: a persistent fed and the market is trying to weigh the balance. the s&p 500 -- romaine bostick alongside scarlett pool. -- scarlet fu. scarlet: the rally is kind of in tact. romaine: it gives you a sense on how investors are trying to look at the data. they are making their own assessments and it is s