>> here we are talking about what the landing looks like. i am looking at 2022, that looks like a landing. >> the market does not have a clear -- at this point in time. we will get a choppy market. >> we are seeing the beginnings of a regime shift back to where interest points matter. >> we are moving back in growth and inflation to what we would refer to as the old normal. >> disinflation is not a concept that is dead. it may be around the corner. >> this is "bloomberg surveillance with tom keene --"bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. jonathan: remember the good old days?

the risk of inflation becoming more balanced? that was, their. good morning. this is "bloomberg surveillance." futures positive by .1%. we are back to looking at inflation in places like france and spain. tom: this has been terribly reported. for america waking up, is not transitory. spain and france, the vector is ugly. the vector is not disinflation. talk about transitory. jon ferro in the vegetable dent at tesco -- vegetable been at tesco, i don't understand the 17% statistic, but easily nine or 10 -- an percent or 10% of food inflation in the united kingdom. lisa: 3.1% -- jonathan: 3.1%. one month ago, -70 basis points in determine curve.

we are not talking 3% of the ecb, we are talking 4%. lisa: i saw that and said i remember when everybody thought if they raised the rate to percent, you would see an implosion of debt market in europe. 4% in overnight rates. you are noticing spreads uncontained in italy. can they execute this and is that going to be enough? do they understand where central banks have to go to continue inflation? jonathan: welcome back. good to see you. you seem excited to be back. lisa: i am excited. jonathan: just to get away from the family. lisa: shh. jonathan: they are not here. let's work through the protection. in the fx market, euro-dollar clinging to .0 1 -- clinging to

106 1.06 -- clinging to 1.06. tom: the bloomberg index is positive .15. the bellwether is if you have--, get rid of it. chevron falls into every story we are talking about. he recently with a tenure track record of 7.1% per year. you look back 10 years, big oil is not doing much but the free cash is extraordinary. eight falls into everybody watching this show in corporate america, how did they respond to this by back? jonathan: the stock is up by more than 1%. lisa, you know, the previously planned rate was $15 billion. that is going to go up to 17.5 billion. lisa: i have no doubt that will come out and say why not reinvested?

chevron will say we are doing for our business what we have been doing for our business. oil majors in general have been returning so much--to shareholders regardless of the pushback. talking about earnings, target releasing earnings, holding a call in new york at 9:00 a.m.. why do we see with respect to inventories? that was the big problem. to receive some guidance from walmart in terms of the year ahead outlook? what is going to be audience for target? are they going to capture the lower and shoppers that go to walmart? the housing market, and number of press gauges coming out. the deceleration expected to continue. yesterday we saw home sales increase, pending sales, to a more significant degree. this is the real conundrum for the federal reserve that is --

is a stickier. austan goolsbee is going to make his first public appearance in this role. he is giving a speech in indiana. this is going to be key because this is someone who does have a vote on the open market committee. he is likely to get some guidance. does he think to present is the optimal end rate? does he give guidance of how quickly he thinks inflation could come down? jonathan: thank you for that. joining us is michael patel at all sprinkle -- margaret patel at allspring global investing. -- what is your take on this morning? margaret: inflation is a global phenomenon. the countries play their economy to try to inflict the grow back.

nothing is going to bring that back to 2%. tom: you are acclaimed for traipsing between fixed income stop -- fixed income, stocks, and dividends when the mood prevails. have you ever seen the $1 trillion moment we are having right now of liv-ex, including this morning with chevron? margie: no because i think this is one of the best positions corporate america has been. develop -- the balance sheets are clean, they have been profitable. we are seeing buybacks where they don't want to reinvested. tom: isn't also the question the taxation of dividends and a tax shield? margie: yes it is. they would like to do that right away and return the money to shareholders. lisa: do you personally like it when companies buy back their shares? is this a reason to go into the

company or is it not because it means investment is in going towards expanding the business in other areas? margie: i would rather see a company and invest wisely then buy back shares. it is sad to say they have a high return on capital and the best use of their money is to reduce the size of their business. i would rather see companies that are investing their extra cash and improving the business. lisa: how optimistic are you that we have seen if not a bottoming out, there is a feeling that the optimism for the economy outweighs the gloom we could see down the line? margie: i think the economy is surprisingly strong because we had the plus 4% in rates last year. the economy is up and inflation is down. there is strength in economy.

when the fed started tightening, there was no sector of the economy that is really hurting or away overleveraged or in trouble that maple valley economy. thanks look pretty good. tom: margie as the margin, that could be the name of your book, when you look at fixed income bonds and quality equities, which we are you tilting? which looks more attractive? margie: i still think you have to go for equities even though we may see a bumpy year. interest rates are rather low for the inflation and yield spreads are narrow. if we have the fed raise rates more than we are expecting, you can see negative price-performance entity fixed. income market i don't think the seals are as conduct nationals yields rs compelled -- i don't think those yields are as compelling. jonathan: you don't think it is

the year for the fixed income bought? margie: 40 investor to get a high-yield 6.5% to 8% is pretty good. but i think equities will do that well and better over the next couple of years. jonathan: margaret patel there of allspring global investment. doesn't think this fed is very -- -- think that as well. "big slowdown in consumer demand might be needed for inflation to return to 2%. this will likely lead to a recession because the nonconsumer sectors of the economy are relook soft." lisa: a lot of people are getting out what a 6% fixed envision which could look like. we don't know what is required to bring inflation down. you were right to point out these long variable lags is not

cutting it. jonathan: 6.5% at the federal reserve 4% at the ecb sounds even more foreign. from -50 basis points, we are not talking 4%. tom: i don't think they have the underlying nominal gdp to withstand that shock. i would love to be proven wrong. what i will focus on is this idea of disinflation, the dynamics on the screen and the one vector not giving way is the real yield, the 10 year yield has crept up for 8, 9, 10 days. jonathan: traditionally in europe you focus on the spread between italy and germany. if you just focus on that and nothing else, you miss the fact that the whole fixed income universe across europe, germany, italy, spain, france, there is a massive lift. lisa: there is globally.

somewhat say it is warranted because -- you have higher inflation. the fact that you are noticing a peripheral breakout means there is not going to be dissent among ecb & among member states to fight inflation and make that the premier concern. this is unique. i wonder what the consequent is with all of his central banks raising rates while we have not seen a more long and significant variable. jonathan: it is amazing. we are going to talk about cpi data out of europe. we will get a read on, tomorrow. we're going to talk about this by back in chevron. warren buffett in his letter, " when you are told that all -- are beneficial to ceos, jewels thing to an economic illiterate or a silver tongue demagogue." tom: he nailed this. what is so interesting about mr.

warren buffett -- thank you for emailing on henry singleton. he admitted this. warren buffett worshiped henry singleton. he was a teledyne out of the naval academy, electrical engineer. he said to a share buyback budget when the shares are cheap. that is the new ones here we are talking about. is chevron cheap? jonathan: coming up, chris verrone --. coming up next, and reordering -- coming up next, annmarie hordern down in washington, d.c.. this is broberg. pilgrim -- this is bloomberg. >> keeping you up-to-date with news from around the world. as a present this report from france and spain, both seen

prices rise in february. consumer prices in france it jumped by a record 7.2%. spain posh envision rate hit -- present. markets and pricing in a 4% peak rate from the ecb. hong kong is ending one of the world's longest mask mandates. the leader says the city has returned to normalcy. shares of companies linked to tourism gained on the news and this comes after the use of isolation have weighed heavily on the city's economy and global standing. the supreme court hears arguments on president biden's move to forgive the students debt of more than 40 million people. republicans content the president is overstepping his authority. president biden put a freeze on federal non-payments his first day in office. in ukraine, volodymyr zelenskyy

says the defense of a besieged city is running out of options. he stopped short of saying that his troops would pull out. he said ukraine would not defend any envision at any cost. -- -- the ability to is cast. it will be purchase stock at a rate of $17.5 billion annually starting in the second quarter. chevron planned a $15 billion buyback rate originally. 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 madison mills, this is bloomberg.

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>> as we mark one year since the beginning of this invasion, the

message i bring you from president biden is simple. america will stand with ukraine as long as it takes. we commend your ongoing focus on the importance of fighting corruption and president zelenskyy's goal of strengthening accountability and good governance. jonathan: a surprise visit to ukraine from janet yellen. let's pick up on the price action. equity futures elevated by not even .2% on the s&p 500 and a little bit of it to close out february and looking to close out the month with a month of losses. the yield has held, three point 9376 -- 3.93. . unterman inflation comes tomorrow. the euro is marginally stronger here. euro-dollar, 1.06. tom: the inflation story is

underreported today. jonathan: we were hoping it would go either way. remember this meetings? yes chairman palisade this visionary process that started. yet christine lagarde sang the risk around the inflation outlook have become more balanced. the data is pushing the other direction. tom: is tomorrow isn? jonathan: next up is german cpi and then isn. lisa: we just continue to surprise the upside. tom: secretary kelly in ukraine, and reordering joins us now -- annmarie hordern joins us now. i can't military officials and even that the president shows the flag in kyiv. is this rick perry of treasury there? annmarie: she is there -- why is the secretary of treasury there?

annmarie: she is there to mark the one-year anniversary of the war in ukraine. she was talking about this financial aid. she was talking about that americans need to know it is money well spent and to the ukrainians she is talking about the fact that there is this defensive in the east but the need to make sure their country is running in terms of everyday items like you going to school, making sure there is infrastructure. that was her message. it was different than the money president made. the u.s. constitutional if all sign of support in ukraine -- the u.s. wants to show a full sign of support and ukraine.

over the last 12 months, you've seen a number of leaders show up. most surprising to me was the one from saudi arabia. they talked about humanitarian aid. this was a huge olive branch to the americans. the americans were under this review of partnership and then you have colonel kirby talking about how he book this visit by saudi arabia. this spoke volumes not just to ukraine in the u.s. but to the arab world. this is the first arab official to go to ukraine. lisa: as we mourn over this first full year, we are dealing with the aftermath of it and to focus on energy and oil and oil production in the u.s.

will this administration has a response to the chevron buybacks? is there a focus on reinvesting in u.s. production? annmarie: this will certainly have a tweet from the president with the press secretary nash for the press secretary. the administration -- the president or the press secretary. the administration has lambasted the oil industry and not putting more money into production. i think this is something the administration thinks plays well with its constituents in the polls. we will get a response from the administration and it will not be afraid,. lisa: does this administration not like buybacks in general? there was a story about the chips act and any money companies receive from it being used for buybacks. is there a feeling politically that it is bad? annmarie: there is that feeling. the president mentioned buybacks

and dividends in his estate of the union speech. -- in his state of the union speech. this is something he president talks about 20 talks about big corporations. the chips dividends, there are not only buybacks but social provisions. if you are using these grants, giving to us and ensure there is some sort of daycare place -- then you need to make sure there is also some sort of daycare place to take care of children. there is a policy angle. countries of concern, you cannot be manufacturing in a real sense if you take this money. the administration is happy to invest in this industry, but there will be strings attached. jonathan: picking up on and the transcript line from the president's state of the union, "we will need fossil fuels for a

while." the republicans then left. what does that mean what he says we are going to need a for a while? what do you think the crude energy suppliers are thinking when he says that? annmarie: i think they are thinking we have been telling you this. i have been telling people on the far left who potentially thought we were ahead of the energy transition that we are not there yet. it is difficult when they're imagining the global energy map with sanctions on russia. that clip will probably be played by republicans going into 2024 as a way of saying this administration was wrong when they came in on their energy policy. i think the president is saying we need fossil fuels and we will need them longer than we potentially thought. jonathan: we will catch up with annmarie hordern in the next hour.

i want to pick up on this line from janet yellen. "we commend your fight on corruption. the u.s. is corrupted to $32 billion of assistance to ukraine for security." there is a corruption issue in ukraine. well documented and well-publicized. the treasury going over there and think that clearly to them tells you the concerns we still have it in washington, d.c. lisa: it is a political liability on a massive scale, especially when strategists say vladimir putin's goal is to become divided, lose interest in funding this work and him going in and taking over ukraine. how does this administration fight the potential for ukraine -- for corruption to undo what they have done? tom: mia suggested that she went for her good friend kristin engel gave a to give cover to

the imf on their next charge of aid? your given -- she can go and say look, the secretary is behind me. jonathan: the spring meetings for you? tom: the four nations. i can't keep track. the answer is they have cut their hands full with a select group of nations. i went back and forth on the buenos aires office on the peso. the black-market rate is 3.79. lisa: i wonder if they will be talking at the imf meetings about the fact that the developed world is raising rates to levels not seen since 2007. this is found to be a liability. is there that push back when business is as hot as it is?

tom: let's go eat -- et. the gravity for united nations is normal. the gravity for -- is like jupiter. et is a squash down because he is in heavy start. the gravity is bigger so they squeeze down. lisa: who is et? jonathan: don't ask more questions. i don't think the imf is leading on anything. their leadership is all over the place. central banks need to heighten more. ♪

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>> decisions being made right now will affect our determined tomorrow. we must act as the united nations ourselves. our progress depends on collective action, collective ingenuity. if we stick together, we can make fixing the claimant the greatest project and greatest achievement of our lifetime. we have the science, we have the solutions, all of world needs is political will.

together, we can create the future where rape and corbyn is removed from the atmosphere, where green buildings and green business transform communities. jonathan: a ton of retail earnings to the week. get started with target, we should get those numbers in a couple of minutes. lisa is going to be all over it. it is fun. tom: every story is different. lisa: and they are all fun. jonathan: computers are up .5% on the s&p five -- futures are up .5% on the s&p 500. the highs of the year before that payrolls report, we are down from those highs by 4.73%. yields are higher on the 10 year

, 3.93. off the lows on a 10 year. on two-year, we are off 80 basis points of the intraday low of early february. testing those numbers from target. what do you see? lisa: full-year adjusted eps is -- this is the estimate of $9.25. looking forward, it is a big problem for them. that is not going to be positive for these shares. when you look over what they are talking about, they are expecting operating margin to reach low single digits. they are expecting some of their revenue. the operating income margin, they're expected to go beyond the pre-pandemic level. that is not creating confidence. you see this shares declining. i will keep digging through that. tom: these are amazing headlines.

their comp average transaction was 0%. with this information? i have never seen a headline like that. jonathan: they give you any outlook for the first quarter. the city first quarter adjusted -- this meant was to 19. aca adjusted rate to 8.75. the stock is down 4.8%. you go through the previous quarters, they were down 13% after reporting earnings in the last quarter. there were down 2.7% after reporting the quarter before that. remember may 18, the stock cratered 23.9%. they just cannot keep out of trouble on earnings day. lisa: what is interesting is the beat an earnings share in the first quarter.

in the fourth quarter of the last three months of the year, it wasn't bad. it is going to get worse. that is the message we are hearing from walmart and from target. tom: at meata and, song digital, the layoffs we are seeing. target's fourth-quarter digital comp sales down 3.6%. that was in the unimaginable event five years ago with digital growth. lisa: that they are also dealing with stiff competition. walmart has been investing in their digital world to compete with amazon. try using a consolidation in the digital world like walmart and amazon? i wonder if there is some idiosyncratic story. tom: lisa will dive into it and she will have coverage of the other retailers. the interview of the day given the gyrations of the moment, joining us is chris verrone.

there are two types of children, there is a stochastic, looking at the jumps and there is strength-based. you and i are on the same page of the efficacy of trend based. is there a trend out there right now? chris: we think there is a dominant trend. it is in the rate market. what you have seen over the last few weeks, i counted 22 countries over the last several days that have made new highs with fewer yields. you have short rates that continue to search everywhere we look. jonathan: i think we have lost chris. i'm not sure you want us to freeze on that shot because that was not very flattering. lisa: we will try to get him back. jonathan: we got target earnings for minutes ago. we offer a range, a forecast for the first quarter.

eps range of 7.7 five to 8.75. the estimate was 9.75. a range of 150 to 190. that is below execution. the stock is a bit stiff, down about 5%. now down only about one. lisa: it was pretty weak. looking at comparable sales in the fourth quarter, it was up 0.7% versus the estimate of a decline, versus 8.9% year-over-year. this is what we are looking at right now. you were looking at a company struggling with the same headwinds as others but perhaps a weaker footprint than the others that have consolidated the power. jonathan: is there a macro story here? lisa: they dealt with inventory issues in the past. isn't the hangover of that? i don't know. 9:00 a.m. called eastern time will be instructive when it

comes to that. how much is a planning issue versus a macro issue? jonathan: in a high nominal gdp world, posting flat sales growth is perhaps not the one. tom: brian cornell as the addresses that. he has household items, beauty products, essentials, food even. target does a bit of a food business. they have this thing because discretionary categories. people are not being discretionary with their discretionary spending because they're spending it on rent. jonathan: discretionary is outperforming on the s&p 500 on the year today. on the year to date -- on the year to date. tom: i have never been comfortable with the word discretionary in sectors. i have never gotten it. toothpaste, is that discretionary?

is a bowtie discretionary? no it is not. lisa: yes. jonathan: bowtie should absolutely fit under that category. it might be stable for you. tom: tang is not discretionary. lisa: when it comes to discretionary, how much i with community resurgence in travel and experience and supporting the discretionary spending? jonathan: casinos, cruises, those crazy people -- on both 40 week. [laughter] lisa: we are going to resurrect that. jonathan: the idea of being stuck on a boat. with you guys? sure. with strangers? no. some people have heard this rent before. tom: we have chris verrone back with strategic us -- strategas

joining us by phone and now. you mentioned it was a challenging trend. you don't kill it with target which we all agree is a well-run company. what sector shows signs of life? what sectors can we be comfortable owning given the moment? chris: what is notable is how the market, despite the rally off the low, we should not call this move monolithic. there are clear areas of strength and clear areas of weakness. on the positive side, we have to tip our hats to the strength we have seen from the industrial. industrials whether it is in europe or japan have been absolutely fantastic. i think they are telling us something. leadership last year in difficult year and leadership so far this year, that sounds like

something that is trying to communicate a secular story to us. i want to respect the message from industrials? lisa: what is the message and how do you traded? chris: intellectually, we can all come up with something, whether it is onshore or offshore. you have big machinery stocks from every geography that have not worked for the better half of the last nine or 10 years coming out of these multiyear basis. whether it is japan and komatsu or the u.s. in parker henderson. we have been using this acronym epic. that will be a more important acronym. lisa: when someone asks you if that means buy or sell, what you say? -- what do you say? chris: there is epic leadership coming from the industrials group, i like them all.

jonathan: chris verrone suffering with the snow in connecticut. thank you for coming in. lisa: eight inches in upper areas of new york. last night in the boys were counting snowflakes. they were leg, let there be a snow day. i was like, 2.5 inches doesn't do anything. it is melting. jonathan: do you get a days in the area of zoom? the pandemic yields notice -- has the pandemic killed's notice? killed's notice -- killed snow days? lisa: didn't you see those videos of people who would pretend this screen froze and then that there were cats behind them moving? jonathan: i love them. tom: people in the snow belt will understand we prayed there would not be a snow day because

if there was you were at home and your father had a driveway that was like a road it was so long and he would hand you the snow shovel and say start at the street. you would pray there was not a snow day. jonathan: you got a little bit of the snow and the country shuts down. you just need a couple of millimeters of snow. lisa: is that true? is that is the ferro household? tom: i have witnessed that. jonathan: in u.k., leaves on the railways, just cancel the train. [laughter] lisa: that is what happens down south because they are not prepared for it. i told the kids just because it hasn't snowed this season doesn't mean you will get is noted. jonathan: in taking a day off -- are they taking a day off?

lisa: they are not. jonathan: futures on the s&p, 2.4%. we get earnings from the likes of targets. a little softer, a cautious profit forecast from the company in the face of still nominally high gdp. discretionary goods. demand is not good there. yields are high by three basis points on a 10 year. in europe, they are a lot higher, particularly in germany. up five basis points on the session. potter inflation in france and spain. it is germany's term tomorrow. this is promote -- this is bloomberg. madison: with the first week, i am a madison mills. the biden administration has a warning for companies lining up for funding from the chips.

it will come with strings attached. they will be restrictions on investing in other countries and limits on buybacks. incentives are meant to used semi conductor factories and at the u.s.. rupert murdoch testified that fox news testifies supported false claims that the 2020 election was rigged. rupert murdoch was questioned in lawsuit against fox by dominion voting systems. fox has denied it promoted false claims about the vote. in china, media regulators are looking for ways to curb excessive video use among young people. no companies have been named but short form video content like tiktok has exploded. regulations that restrict giving time for minors could impact the company's impact big companies. vanity u.k., homebuyers record their best discounts.

the average reduction to a asking price was 4.5% interest .4% last year. shares of zoom are higher today. deplatform gave an upbeat profit forecast for the current quarter. the outlook suggests zoom is finding its footing after a dramatic boom and bust cycle during the pandemic. a cost-cutting push is helping offset is laid down in sales. 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 madison mills. this is bloomberg. ♪

the first time your sales reached 100k was also the first time you hit this note... ( screams in joy) save 20% with the lowest transaction fees and keep more of what you make. with a partner that always puts you first. godaddy. tools and support for every small business first. this is ge aerospace, advancing flight for future generations. ♪ welcome to a new era of flight. >> we have not come to the reality that our concepts of demand and supply for labor and wages may not work the same way our textbooks told us they did.

we know if you make people poor enough, they have to go back to work. is that what we should be doing? jonathan: what a treat to have frances donald back. just absolutely brilliant. asking really important questions about central banks when they use this phrase that we need demand destruction. what do they mean? ultimately they want unemployment higher, they want people out of work. i am not saying they would like to see that but that seems to be dealing is there discussing when it comes to soccer demand and lower inflation. lisa: what is the connection here? what would keep people from spending money if they have jobs and the rank is being paid more? what is the transition mechanism? have a higher mortgage rate? they don't if you have locked in your mortgage rate. it is difficult to get inflation lower by defendant's policy unless you get reduction in the

workforce. jonathan: she asked the question, is that what central banks should be doing? tom: that is the heart of the matter. it is a prescriptive policy to low-inflation. if we do something, we can move inflation down or is it a greater system off of a pandemic off of the bite and stimulus? it has to be worked out. the insight was the this. do we see. -- was the disparity we see. i've never seen a model role -- inflation is here and the fed is down here. that gap is bigger than it was at the heart of covid. that is how out of whack we are. we are massively out of whack and that is how you fall back on individual data. out of tufts university, michael baker joins us. really good on the core of what

retail is doing. i am going to go -- lifo fifo on you. is spac which means inventory is out the door. target is one of the best well one machines we have. what are you learning about all of retail's inventory agony from target? michael: the retailers have done a good job realizing they made a mistake in working through it. this is hurting a lot of retailers in 2022. they got really over extruded trying to bring in inventory early. everybody got over sorted. the retailers realized it quickly around march or april last year and aggressively moved markets down. it was a tough year for a lot of the retailers mistake got it stand. tom: you look at it as a

pandemic one-off in that the target and others will return. you raised your price target on target and couple of days ago. what is the timeline when they clearly inventory challenge? is it now or in 2024? michael: they did it. their inventory as of this morning was either up or down 3%. it was essentially flat. down 3% at the end of the fourth quarter. at the end of the fourth quarter, we were up 3%. they really succeeded in clearing out those inventories. they started 2023 clean. that issues behind them. lisa: i was looking at the headlines as they came across and i was confused. they seemed pretty negative and they also seem to multiply. you see a profit up of 43% in the fourth quarter, a forecast

that came in under. how do you make sense of this? michael: it does not surprise me. this is what happened with walmart last week. walmart reported a beat in the fourth quarter, gave guidance look consensus and conservative. the stock bit to down in the premarket and then ended up dana. kate is -- and ended up being up. that is what we are seen with target. mortgage -- margins are going to be better. they will hit their level in 2022 and be higher in 2023. the analysts got too high in their estimates. they guided to something that will be around 4.5% or 5%. that is up from 3.5% in 2022. we are growing next year, just not growing as fast or recovering as quickly as the consensus wanted.

folks -- those consensus are conservative. 2023 will be better and 20 even beyond that. it might take longer than the consensus forecast had that is a function of the analysts getting too aggressive. lisa: it is hard for me to get my head around this. are you saying the markets did not believe the estimates the analysts put out there? we sang they were eyeballing it? or is this a target lowballing it to set expectations low and everybody said we know what you are doing so we are going to get ahead of that? michael: moore the second. i think target is giving a good conservative guidance. i think there giving guidance they are believing they can come in ahead of. i think it is the right thing to do.

the biggest mistake a lot of retailers made last year was getting too bullish and they had to go down two or three or four times. brian cornell does not want to do that again so the estimates they have given our conservative. they show nice growth, but conservative. that is positive. lisa: it has been flipping and flopping and target has been more volatile than walmart. we cannot make a read on the sentiment given the volatility. i am wondering if you think they work through the innocent credit issues, whether it is -- through the idiosyncratic issues, whether it is inventory which comes to walmart or amazon. michael: i think they are doing well on digital business. they have been one of the leaders in that space and understanding that stores can be any asset for your digital business rather than a hindrance. if you go back 10 years ago, the idea was to close the stores.

target realize they can use stores to supplement the online business. the poster child to me of an original retailer. have that included chopped competitive twice. -- they have resorted to nondiscretionary categories -- discretionary categories compared to walmart. and that is why their margins won't grow as much this year. still going to grow year-over-year but not as much as amazon. tom: what is your single best buy? what has the next to get us out of this year? michael: in our 2023 outlook piece, we put o'reilly automotive, dick's sporting goods, and ulta beauty. we also put us target. tom: ultra beauty, i'm all about

it. lisa: it is ulta. do you spend a lot at ulta? tom: we have a small price point but we have many things. jonathan: when you go to pay, you pick out more. tom: the prototypical is you don't have counters in women's bathrooms. he limited the number of units of stuff. jonathan: i am sure you live in a happy household. target's stock is all over the place. the stock is now higher, 5.5%. it was lower and now it is positive. lisa: it keeps climbing. what michael was saying there was fascinating, this idea is basically people are rejecting the view that target is more

pessimistic and they are planning a to low expectations. everybody has their gig. tom: -- has a fancy deutsche bank and from india -- bank ad from india. how about a i percent annualized cd -- this is not crypto, this is deutsche bank. the difficulty is it is in indian currency. you have a currency risk there. boy, has the rate structure changed. i have not seen that since i hadn't known gray hair. jonathan: starting to look more like a high-yield. there is always junk. credit here in the u.s., it is high-yield again, finally. lisa: and people are going into that again which is why it is

becoming less high-yield. ♪ conventional thinking delivers conventional results. at allspring, we break away with purpose. harnessing data-driven insights and boundless curiosity. we dissect the market from every angle. helping to build portfolios that redefine what's possible. because investing isn't one size fits all. allspring.

purposefully divergent.

>> here we are talking about what is the landing look like. i'm looking backwards saying that looked like a landing to me. >> we are going to get a choppy market. >> seeing the beginnings of a regime shift back to a point where interest rates matter. >> we are moving back in growth and inflation. what we would refer to as the old normal. >> disinflation is not a concept that's dead. >> this is "bloomberg

surveillance" with tom keene, a and lisa abramowicz. jonathan: we should do a whole hour of people saying we have no idea. good morning for audience worldwide this is "bloomberg surveillance with tom keene, lisa abramowicz and jonathan ferro." plenty of data, a fed speak through the week. picking up on european cpi this morning. hot in france and spain. we get a read on germany tomorrow. tom: transitory further gone. this is the second tranche. people think it's physics envy it's just the reality and there's a vector of french inflation in no way shape or form signals disinflation. >> all of a sudden talking about 4% at the european central bank. that's absolutely ridiculous. let's talk about earnings in the united states for the week.

a ton from the retail, target first out the gate. let's put the stock price action to one side and look at the numbers. the guidance is poor relative to what's expected for the core and the year ahead. lisa: which is the reason why you expected to be lower. they are higher. this to me is the question, are people looking to the past any negative guidance and just saying they are playing a game with us and then they will hurtle over that lower estimate and we've got to get ahead of that instead of just waiting for the data to come out. tom: the math is back to what it was 16 years ago just -- this security analysis actually matters. davidson, truly an expert at inventory dynamics. the answer as he said they are clearing inventory. they are clearing it out. stock is up by 3% in the

premarket. futures just about positive by a quarter of 1% on the s&p 500. a move lower on the month as we close out february. we continue shifting higher on the 10 year yield by basis -- three basis points. lisa: we talked about target releasing's -- earnings release. we will watch the earnings call the target will be holding. more interested on that in terms of the price action considering the fact have they cleared out the issues. how significant do they see the deterioration in demand as the year goes up. we get a home price data as well as the s&p 20 city index. it's going to decelerate and that the expectation, but by how much because we see a resurgence in that. jonathan: just needs to rebrand. lisa: now it's merged.

jonathan: whatever. lisa: 2:30 p.m.. chicago fed president will be making his first public appearance in this role giving a speech in indiana and he is a voting member. let's see how far he thinks the fed has to go. thinking about the landing and he amended the no landing to no landing now and then a hard landing later because feds -- the fed will have to raise rates so much. jonathan: neil offered one in the last one he four hours. it's not that they are saying the economy is never going to land or weaken, they -- the original pushback is that we would see recession in 2023. they are saying that's not going to happen. at least for the month of january pretty much confirmed that. lisa: the flipside if we don't

get that recession do we get a harder landing on the other side because of what central banks have to do. jonathan: good morning. thank you for being with us in new york city. you came into this, the equity market he -- the equity market rally you state conservative on this. >> the reason we are cautious is if you look at where evaluations are its pricing in a modest growth outlook for the economy as well as for earnings as well and if you look at where rates are. they cannot cut rates on markets closer. the markets are still looking at rate cuts later in 2024 and we think given how resilient the economy has been and how much the recession is pushed out to

later down the line rate cuts also need to be pushed out further as well. equity markets are not quite appreciating some of the macro challenges that we see happening and that's why we have been prudent. our time horizon is six to 12 months and some of that metrics that we used to support the cautious view is valuation based but it's not to say we couldn't have shorter-term bouts of rally driven by technical vectors, short squeeze, foam oh flows as well as real money. investors are telling us after a year like 2022 they cannot afford to miss the rebound so they will pre-position for that even if they know or fear that. tom: in your beautifully elegant note you talk about a new regime. whatever it is, it's a new

regime. if we are not going back to securities analysis and vector analysis pre-2020 what are we going forward to? wei: the new regime is predicated in terms of drivers of the current environment that we are moving from the great moderation, economic cycles shaped by this demand to the current environment shaped by supply and supply constrained in particular. vector -- factor analysis is difficult because they are time varied concepts and that means different things to different people. tom: we have to do a mathematical clinic here. in the breakdown we have taylor rule is diversion from fed policy. if you do the partial differentials analysis, you have no idea visibly where you are going. if you do the partial differentials across any fed

hearing now, do they work? wei: at this juncture, no. because of how unstable some of the forces are thinking about it moving temporarily before heading back down given the environment that we see right now. as it translates, it is tough to apply the old playbook. people say as we head into recession we will shy away from value but we are in an environment where rates are going higher and curves should steepen over that six to 12 month horizon so we think there's more room for factor value to perform but we will be more selective. lisa: when you talk about rates going higher from here, hsbc put out a note saying the debate is

whether to buy and hold short bonds close to 5% or go for the longer ones which are almost 4% and it goes to this belief our rates can go higher and stay there for a longer period of time or do you want to capture what you can get at this point? where do you fall on that debate? wei: the former. we like front end of the curve over back end of the curve. you get paid almost 5% and commercial papers a new 5.5%. this is a very attractive income opportunities given our review that rates will stay longer for higher and longer. we don't necessarily want to go into the long end of the curve especially given how inverted curve is at this juncture. it's under appreciating the degree that we will have to deal with inflation and we do want to sit on that. lisa: when will the value proposition change?

when will risk asset start to look more attractive to you than a 5% short-term rate? wei: it comes down to to what extent macro damages are being promised in by markets. the reason we are currently shying away modestly underweight is we don't see the macro challenges being fully priced in on the short end of the curve. if market pricing changes in closer to our fair value that would change things as well. on a global basis we have an overweight very modest rating on large market equities. it's a battle between the short end of the government bond market in the u.s. and emerging-market equities. given where the pricing and valuations at this current juncture i would say is this is an environment that's heightened

into macro we have to change our views quickly. we changed our views twice. it's very dynamic. jonathan: pmi's this evening. how's the reopening going? wei: we have the view that 2023 should carry growth to something with basics handle for 2023. that's off the low basis of 2022 so clearly things have to be fueled together talking about long growth trend. currently think the growth pivot that we've got a flavor at the december central economic working conference actually will be further reinforced to the sessions coming up in two weeks time and the pmi data could also give further evidence of that to the growth that comes through in

this reopening and restarts dynamics in china. over the longer though structural growth in china is very challenged by the end of this decade we see china growth stabilizing. so longer-term challenging but near-term restart opportunities. jonathan: 6% gdp this year and then back down to levels like 3%. tom: just so you are aware he's on the final of the 270 day outlook. for you to change your view three times and then he puts out. jonathan: what we do here at bloomberg surveillance. thank you. coming up in the next hour, futures up this morning. good morning. >> keeping you up today with news from around the world, with the first word i madison mills.

the supreme court hears arguments on president biden's move to slash student debt of more than 40 million people. republicans contend the president overstepping his authority biden put a freeze on federal student loan payments on his first day in office. a surprising report from france and spain. both seeing prices rise in february. consumer prices in france jumped by 7.2% from a year ago. spain's inflation rate hit 6.1 percent. that will increase pressure to deliver more of those interest rate hikes. for the first time markets pricing in a 4% key rate from the ecb. in ukraine, president volodymyr zelenskyy appealing to the u.s. and allies to supply advanced fighter jets for the war against russia. zelenskyy says an attack by drones that killed emergency workers show that ukraine needs the jets. president biden resisted sending

f-16s over concerns it could escalate the war. in hong kong -- hong kong ending one of the world's longest mask mandates. the city is clearly returned to normalcy. this comes after the past three years of global isolation have weighed heavily on the city's economy and normal standing. global news powered by more than 2700 journalists and analysts in more than 120 countries. i madison mills and this is bloomberg. ♪ if your business kept on employees through the pandemic, getrefunds.com can see if it may qualify for a payroll tax refund of up to $26,000 per employee. all it takes is eight minutes to get started. then work with professionals to assist your business with its forms and submit the application. go to getrefunds.com to learn more. the first time you made a sale online was also the first time you heard of a town named... dinosaur? we just got an order from a dinosaur, colorado.

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♪♪ welcome to a new era of energy. >> we have not seen china go all in with respect to supporting russia. they have not condemned the invasion that mr. putin

perpetrated on the ukrainian people nor have they decided to provide lethal assistance. as the president said he doesn't believe it's in china's interest to do that. jonathan: they keep hitting on it every single day. john kirby there talking -- we will talk about all of that with annmarie hordern in just a moment. some pretty dreadful numbers out of target in terms of forecasting the outlook for this quarter and the rest of this year. higher in the premarket, a 1.5%. lisa: i think there is some idea they are guiding lower and being ultraconservative in their forecast. then all of a sudden it's a positive surprise. that said i wonder how much people are looking purely at the inventory issue. they did pretty poorly last year

compared to walmart and people might want to get ahead. there is a look for missing out. jonathan: the stock you mentioned. this year not like last year these names have really struggled particularly with goods. was it last may just the stock cratered. this morning we are up about 1.6%. tom: execution and the great big box, no one's focused on amazon. this story and that story of executing quicker delivery, executing the last -- it's a huge story. jonathan: who else do we get this week? i look forward to that. tom: as a child annmarie hordern

would go up and down the escalators at macy's day after day. she's up on the eighth floor. annmarie hordern joins us now. our washington correspondent. on china as john says it just won't go away. do we have evidence or intelligence. do we have knowledge or gases -- guesses that china is helping mr. putin in his war. >> all we have are words from official saying it's potential they are looking into. there was this report in the german press that it was potentially on the table of contract for lethal weapons for drones from a chinese company that likely had links to the chinese communist party that

would be going over to moscow. the administration is not provided evidence. the president really downplayed it with his interview with abc news and said he wasn't expecting china to do that. the u.s. officials have come out whether or not it's jake sullivan or admiral kirby saying there would be the severe consequences on beijing if they were to cross this line. tom: is this imminent? what is -- the thing i'm having trouble with when i look at the zeitgeist out there is i don't have a timeline. there's a lot of conjecture but is there a timeline of when things heat up with china? annmarie: i do not think there is a timeline at the moment. what you are seeing in terms of china trying to put out into the world is they want to be this global statesman trying to talk

about a peace plan, proposition plan which is a lot of similar toned rhetoric we heard from beijing already but obviously if you look at the plan it would help russia and putin. they are trying to say one thing and do another. we do know they had helped russia and in essence they are still buying russian crude and fossil fuels. this is how putin is able to maintain his economy. there's been a lot of trade than what would've been expected. this line about lethal material there is no timeline. lisa: there's a headline the u.s. is setting a deadline to remove tiktok from government devices. this has been an ongoing discussion some people argue it's interesting that there's tiktok on a lot of government

advice -- devices. as a question of what business related attentional sanctions or regulations could go into effect as a result of the jawboning we are hearing from the administration. is this headline about tiktok indicative of anything further? annmarie: this headline you are seeing, congress had already voted on this. dozens of states have acted on their own to do this as well. i'm glad you brought up tiktok because it will be front and center today. today at 7:00 p.m. we are hearing this china select committee from represented gallagher who is talking about wanting to ban tiktok. at the same time being marked up and voted on today in the house foreign affairs committee is representative mccall's bill on tiktok which would allow the president to ban it outright. now this potentially has some pushback already democrat

represented of meeks from new york saying it's way too broad but there is floating right now a number of tiktok banning bills in congress and when you hear from represented of mccall talk about it is children say dad this is not going to make you popular. it goes back to the reasoning of why they are on government phones. this is how they reach the youth in america and that's why it's a major concern for republicans and democrats on the hill. today with this kick off the china select committee tiktok, sanctions and all of this will be front and center. >> how much is there a sensitivity as these discussions go on about targeting the communist party of china and not necessarily chinese or making some sort of blanket statement. how much is there a sensitivity of avoiding xenophobia and mccarthyism that could emerge

from these discussions? >> it's a good question. i think when lawmakers and leaders talk they sometimes will just say china. you bring up a good point there is a big difference and -- between the party and the people. at the moment i sometimes see that there really isn't a distinction being made when people use their choice of words. jonathan: thank you. an important conversation. a tiktok expert. tom: as i set about the china timeline, there's no timeline. we are every day jawboning about this with china. there's no diplomatic math here. jonathan: getting access to the chinese market is going. lisa: what chinese market for them? they are not getting involved in

that. jonathan: they don't want to upset their kids. is that what she was alluding to? lisa: they are not able to advertise on tiktok. how will they reach the young people if they ban it. jonathan: the white house engaging in this idea you can have some kind of ban would also the same time engaging with influencers who use the platform. lisa: this is the conundrum. jonathan: she's a financial influencer. lisa: i am not on tiktok, i don't understand tiktok. we have macy's. jonathan: very good. lisa: also on march 2 we have costco. jonathan: thanks for doing that. that's what i was thinking of at the time is retail coming up. target out earlier. coming up the chief investment strategist fixed income will talk about none of this. what's happening on the bond market rate i'm sure he's not on tiktok. tom: he's probably on tiktok.

jonathan: he strikes me as the guy lisa: he does those music videos. jonathan: have you seen some of the jackets he wears? without a doubt. tom: on the board. [laughter] jonathan: making friends here. isolating people on bloomberg surveillance. tom: downloaded the app tiktok. actually looked at it for an hour and i was appalled. jonathan: what did you see? tom: how any company can allow them. it was -- ♪

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jonathan: equity futures trying to close out a dreadful month on a high. on the nasdaq a half of 1%. tom: i haven't on the drawdown thing recently. the answer is off the rebound. we've had a little bit of ape back but still nicely above the moving averages. it's not as gloomy as lisa would make it. jonathan: down from the close of yesterday. we look at bond market the moves we've seen have been phenomenal. the u.s. two year yield is up. if you take it from the intraday

low which was the first couple of days. two year yields up. they are just short of that up by a basis point. on a two year. the yield curve has changed radically from 12 months ago. did you see the german two year through 3% on four basis points on the session off the back of course epi. you get a read on germany. german cpi. in a couple of days you'll hear from the euro zone its entirety. there is a feeling now you will get upside surprise a lift relative to what we expected a couple days ago. just about unchanged euro-dollar. gone from talking about maybe the ecb hiking may be getting back to zero and perhaps going to one and then to, maybe three. now 4% in the euro zone. >> what does christine lagarde

do with the unique fiscal structure of her ecb. you're the expert on. to me it's just a complete mystery. it's truly original territory. jonathan: the good news is the risk looking at italy and germany that spread is now 118. it doesn't bring much comfort to italy. the italian 10 year at 4.5% with the threat of moving higher than that. i don't think they sit down and say it's good. the fact of the matter is rates are higher. lisa: will they have to raise rates higher even though longer-term it's going to mean a much weaker economy. we do have to have faith that will work as it has in the past. buyers don't seem to have that faith which is this interesting conundrum. front and foremost target came

out with earnings that were pretty poor if you look at some of the forward projections adjusted earnings-per-share expectations. versus an estimate of $9.25. now up about 2% people looking past the negative guidance and saying you guys are good to be great. it seems like you work some through in -- through some inventory issues. at one point up seven point 6% after yesterday's earnings that showed better-than-expected fourth-quarter results as well as forward outlook. even though perhaps people are trying to get back to the office. do you guys like zoom? jonathan: got to wait. tom: i am so blessed. jonathan: i've got no time. lisa: my issue is that gap when someone speaks and pauses the other side so people are talking over each other. jonathan: stocks down from the high of the pandemic.

that stock is down 87% based on the closing price yesterday. lisa: people thought zoom is the new office and it wasn't anymore. essentially everyone would work from home and kids would do school from zoom and everything. also looking at chevron. we talked up the share buybacks and the potential repurchased stock rate despite the decline we seen in oil prices. this goes to the central thanks of oil companies despite some of the pushback. you are still seeing them not invest as much of your cash in production because fossil fuels in 10 years. >> i think it was 13 billion to 30 billion. i know it's a raging debate but to me it's intelligent use of cash. there is a debate as you mentioned the basic idea here

are you buying shares at the top of the market or buying them cheaply. that's the only real debate about shareholder buybacks other than not investing. >> do you want the quote because it's a good quote. over the weekend when you were told share going to -- pretty punchy stuff. tom: to me it's just all about taxes. we will talk about that later. over the bond market alaska question i've never asked. we do that with the chief investment strategist at p jim. a really interesting house including taking down all sorts of total return and fixed income . robert i want to talk about the next shoe to drop in the fixed income world. an open question not so much

negative on what keeps you up at night but simply what is the identifiable next shoe to drop six months in your world. robert: i think that's the thing everybody is wondering about. it's not going to happen. the fixed income market was murdered in 2022. we had yields rewound decades backup to really substantial levels and the markets clearly recognize the value. volatility has gone down, money is coming back into the market. i think people are looking for the excessive boom with too much inflation and where the next disaster will be come long-term rates are not making that much progress higher with the numbers they are putting in there. it's just slightly exceeding

levels that were hit last year. we will be in the meat of the distribution route. >> that's a nice way of putting that and to carry it forward you have a coupon to work with. are we reverting to institutional behavior of 2006 and before because we have a normal math market and normal coupon? robert: i don't think we are yet? -- i don't think we are yet. investors have not completely wrap their minds around the fact there substantial returns and fixed income. there could be some asset allocation to happen there. the other thing that will take place is the trade-off in cash and long-term fixed income. i think eventually at some point in the future we will see inflation coming back down to target. we may see some gentle drift back down in rates. the people that stay in cash are

not going to lock in and terms for the long term. that's the big trade-off here is exactly when do you want back in the rates as opposed to have the certainty of 4% or 5%. >> when is that time? >> i think we are pretty much in the zone. i think markets are having a hard time pushing the 10 year treasury over 4%. i think we will be centered around four until and if as if the fed gets above five and then you may see some pressure up towards 4.5. we are pretty much in the top zone. we passed up through the 2% averages of the post gf see environment we are back to the pre-gf see levels and i think we will be range bound at this level. >> what's your concern level about the increased defaults.

it's been shocking to me that three or four years ago people were saying when rates would rise in inflation ticked up you had this massive default cycle and now people are saying the companies look great, they locked-in term structures that immunize how much interest they will be paying for a long time. do you agree with that and lean into riskier credit as a result? robert: yes i agree with that. i think the performance of credit has been better than some have expected. but companies have really built in the driver's seat since the bottom of covid. they've been very conservative in their activities, they have held themselves back from overinvestment in the excesses that you've seen in so many cycles in the past. i think you going to deep credit i think it's a point in the cycle where you need to risk that but in the -- you don't have to reach to get the value.

i think there's more value generally speaking being over allocated in that region into things -- without reaching into things that have excessive downside risk. >> when was the last time you were excited about a potential return target to investors. you don't have to extend that far and could get 8% on your overall portfolio. have you had any kind of -- to this moment? robert: no. all the times in the past were rates have popped up during my career. moving back longer than you would think to the peak in interest rates there's always been a secular bull market aspect and so there was no real trade-off. it was time to extend to go back to the curb. it's a little more difficult case to make because i think we will be range bound.

the vast majority of the time historical rates have been at these levels. i think we will be in a relatively steady state. i think the increases of return extending duration are going to be more subtle and realized over long periods of time but there's no exact comparable number back just in the past decades. >> coming out of this pandemic it's a real change for you and the team. how will this change your approach to fixed income. robert: it has not changed our approach to fixed income. we've always looked for the high information ratio trades and there are high information ratio trades in the interest rate environment giving us shape whether it's in relative value or whether you're looking at excessive confidence the market has in terms of what exact form the fed funds rate will take.

those opportunities are there that will profit from conversion to a normal shape curve. we've always looked for the fundamental value in the market and that's no different. >> the yield environment is certainly different to what we saw a decade ago. thank you, just phenomenal. still struggling to internalize the post-pandemic realities. particularly the fixed income market. >> you are getting a real sense of that. jonathan: a: 30 eastern time. investor management that's can a, in that 50 minutes or so. going to talk abut energy. 77 on wti. >> keeping you up today with news from around the world with the first word, i'm madison

mills. the biden administration has a warning for companies lining up for funding from that chips act. it will come with major strings attached. a limit on investing in other countries and stock buybacks. the incentives are meant to boost semiconductor factories in the u.s.. rupert murdoch testified fox news commentators did endorse false claims the 2020 presidential election was rigged. that's despite murdochs doubts about the conspiracy theory. murdock was questioned in a lawsuit against fox but dominion voting system. fox has denied that promoted false claims about the vote. oil headed for its fourth monthly loss in a row. west texas intermediate down about 3% since february. investors optimistic about demand in china but that's been eclipsed by concerns over tighter monetary policy and increasing oil supplies in the u.s.. homebuyers in the u.s. are

increasingly paying in cash. the share of all cash deals rose to the highest level since 2013. it was over 15% in three cities including atlanta. number of institutional investors declined suggesting a regular buyers turn to sell funding to avoid those higher mortgage rates. global news powered by more than 2700 journalists and analysts in more than 120 countries. i'm madison mills and this is bloomberg. ♪ (upbeat music) there's more to business than the business you're in. (robot whirring) want smarter factories? that's the internet of things business. accelerating r and d? data science business. hey. have a look. managing global supply chains? shrink our carbon footprint business. thank you. (in foreign language) that's where deloitte comes in. with a potent blend of acumen and technology

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>> consumers have consumed 13% less energy than they otherwise would have done. another 10% saving coming through. we consumed 23% less energy as a

result of the weather and people changing. that's really help the supply demand situation and left us in a much better position. >> one of the biggest hawk trader on the planet, crude closed down last year at 80.26. wti right now 77. i'm sure many of you are asking china reopening, what reopening? 77 at the moment on wti up about 1.8%. we can discuss more on that in a moment. yields up in europe, that's where it started earlier with french inflation and spanish inflation coming in hotter than expected. another read on the euro zone inflation later this week. we get this regional breakdown through the morning. look out for that. euro-dollar just about unchanged. futures will lift.

tom: john, help me i think the major theme is really off the american radar is inflation trends which are just stunning. can you imagine if we see those here. jonathan: the stickiness of it. they were hoping it would fade and it seems to be accelerating in some places. tom: we had this out 40 minutes or so ago but a little bit of housing news and disinflation. >> is this good news? i don't think it is. it's great for people who want to sell their homes but you're seeing a resurrection of sentiment with the housing market. mortgage rates go down a little bit and everyone floods back to the market which indicates they haven't really diminished the underlying spirit and fervor. >> always stated but nevertheless important.

> just to clarify. tom: wellesley and schiller at yale. it's valuable. we've always taken pride with will kennedy in our hybrid economy coverage usually centered around economists. citigroup or a guy at goldman sachs but it's on the bid particularly looking to the future were a lot of information can be gleaned. he has the privilege of working with dominic. bob joins us this morning. you've been doing this a few years. do you have transparency in knowing where the bid and the ask is. is your market running normally? >> normally we are stuck in the range unfortunately and we've been in it since the end of november.

trading between $70 and $83 for four or five months now. we are trapped in this range. it's the china story versus the inflation story or the fight against inflation story. we have been stuck in a market structure where the front end of the curve is cheaper than the second. that's a weight around the markets and. we can get out of the mud. we are stuck in the mud here because of this market and the proof is in the pudding. basically a $13 range for months now. jonathan: let's talk about one side of this, china. has china not reopened the way people expected at the start of the year. what's your take on things? >> you can go from zero to 60 in .1 second. it's going to take time. the international energy agency is perhaps the most reliable. they are looking at q4 for that real growth.

like i said it's too soon. we were talking a couple months ago about demand destruction in china and now we expect them to carry the world on their backs to the promised land. it just doesn't happen that quickly. i don't think it's fair to the chinese to expect them to be in that position either. they will get there eventually it just won't be tomorrow or anytime in the near future. jonathan: there's been some talk that may be russian supply is supplies to the upside and could offset additional chinese demand. when does that eventually kick in? robert: i don't think we will blow out to $130 like we did during the early days of the war. but i think we get to $100 based on supply and demand. another problem is you have to keep in mind in the united states storage is a 22 month high. we have a lot of crude oil

because we had a warm winter and the heating oil basically storage is never developed. the relative price to crude oil starts to tank. if you don't need the heating oil you don't need to crude to make heating oil. that dynamic is played out as far as this is concerned. gasoline may be able to come to the rescue. there is some hope there also that that could have been in the market. below $70 it's kind of the abyss. that's a very important level versus wti at $70. lisa: i am curious as you start to talk about the potential for further declines how you understand the driving season in light of electric vehicles. i say this because it's muddy -- muddied the picture a bit creating a negativity for oil prices in an upturn positive growth causing oil prices to

rise. we are not seeing the same levels of demand play through. is it because of eeev's? robert: i don't really think so. there's definitely it's chipping away every day. make no mistake about it. there will be a time in our lives where it's the dominant force versus gasoline. it's not going to happen in the next year or two. fiscal amounts they will put out a pretty big number later in their production cycle. so that's a brand-new big chunk coming to market. but it's for lack of a better word it's kind of a -- bucket right now as opposed to the inflation story where they're worried about money in their pockets and driving across. it could cost them significantly more as we approach memorial day as long as price doesn't rally like it did last year.

and kill the golden goose in the process. lisa: we were talking about chevron's buybacks do you think it's a sign oil majors don't see any prospects for investment and just shareholder returns is the best use of their cash? robert: there's a little bit to be said for that. they are in a tough position for several years. this is a mini golden age for the oil producer. they've learned their lesson from increasing production at every opportunity and they realize that's not the way to run that. they are now on track because they have adopted this formula because of buybacks and dividends. their obligation to shareholder has done a lot better job. >> president biden said we need crude for another decade. lisa: that was good to be rolled out. >> and then he said after when

people started laughing. bob over there, thank you. catherine man at the bank of england saying lower energy prices i'd push up consumer spending. we've heard that a few times. tom: we have a huge respect for dr. mann and that's -- she used to teach at brandeis. i can't remember the details on it but the answer is she has the stock in her hand. that's not the value end. that's the length of time we may see this. they are all trying to slow the economy. as they try to brake the economy they may break the economy. jonathan: last week there's been a story developing between china and the united states.

they are worried that china may support russia's war effort directly with lethal aid. everything a day and most we've heard from one official or another talking about this. and saying the following. the no limits partnership is a real concern. >> my answers are intelligence capability knows a lot more than is leading on. we seem to hear from the secretary of state they are monitoring this. they are going to monitor the advocacy. >> the white house said there would be consequences and the question being asked is what are the consequences. i'm not sure where that came from.

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>> the fed wants to send a message rates will stay elevated for an extended period may be as much as a year. >> the slowdowns likely to be

uneven. >> it looks like the fed is doing the right thing and that counts the most. it's the end of free money. >> we are entering the fiscal policy decade. >> this is bloomberg surveillance with tom keene, jonathan ferro and lisa abramowicz. tom: good morning everyone. it's powerpoint tuesday. we welcome all of you. futures up 14. we have focused on inflation. jonathan, one hundred 18 page powerpoint just landed. jonathan: have you read it? tom: page 54 is where the story begins. jonathan: you got that far? tom: i've done the surveillance scam. an eagerly anticipated statement of the future. for the headlines out now i'm

get a say they are pretty vanilla headlines. jonathan: what headlines can you see? tom: gs equity cn. lisa: on balance sheet investments to a reduction next year setting a target of $10 million in management fees going through some of the goals of the company. the question will be about leadership and overall strategic targets. tom: i'm get a make this clear. the keyword is scale like at target. frankly are you shocked over ecb had a 4% central rate. and then talk with the troubled banking firm. they need scale to make this work. is that true of everything we deal with? jonathan: let's start with rates. game changer. thinking about the ecb unthinkable 12 months ago. that's where the bond market at all these companies have gone.

tom: it's good to be interesting to see. christopher nailed it. a new regime, is it a new one for everyone we speak to? jonathan: she doesn't see reinvestment risk go to the short end which is a short way of saying we think this new regime is here to stay. high yields will be with us for a while. lisa: if it isn't just going into the longer end of the curve it's going into equities. other areas will be good reinvestment moments. it's better to have cash and be nimble at a time when you're changing two times in two months. tom: let's review this. jobs day is not normal this month. it's delayed and tomorrow we get the statistic. you like tomorrow as the first look of where we are. >> i think the question we were

all asking is what is the market doing up here. something has to give. the markets in a come down or the pmi has to recover. i think it's indicative of an economy doing better than expected. as we look to february this will be earnings in the month of february after a fantastic january with one big question for most people. can we confirm the january data and there might be some indication that weekend. lisa: good news bad news and this is something we can throw away. people say good news is good news. that's what you're feeling in a stock market that has more fear of missing out then some view forward of pessimism at a time when they're willing to rally even with a negative look for the year ahead. >> looking at the data right now. i'm looking at the goldman sachs powerpoint and it's a lot of

managed talk. the bottom line is what's written. i'm a big believer in that and i'm looking at page 55 where we are going to manage through the complicated credit environment. you think? that's the challenge. jonathan: it's the fact that challenge hasn't emerged in the way we thought it would have. if you told me the fed was good to do what it's done and we wouldn't have what we've seen ultimately i would expect the spreads and periphery in europe to be wider. that's just not what's happening. tom: the answers corporations adjust the target rate out the door. i don't know what to make of this. a spread which is round-trip, a 90 basis points for a cup of coffee and then turned back around with lesson version.

we come back down at -87 basis points. that's a round-trip un-inversion since friday. jonathan: accelerating over the last month, a massive lift on the two-year. the 10 year getting closer and closer to 4%. to your point the next big stop is payrolls. tom: let's jump into it. chief investment officer. what has changed in your outlook in the last week or so? we are in shock back and forth. what's changed in the placement? >> markets are adjusting to the fact the fed has more work to do. monetary tightening is not taking a bite out of the economy. it's bad news for inflation and the markets. markets stay in a trading range and the fed stays in a holding pattern until we can get some type of break on inflation or spending on services. we are not seeing that yet and

that's why we are generally thinking the markets will have trouble continuing movie to the upside -- moving to the upside. >> basically it's not worth going into the long end of the yield curve. you can get 5% at the short end because you could get higher yields and a better opportunity elsewhere. do you agree with that stance? >> i think that will be the case going forward. with three hikes getting priced in and then no rate cuts likely a pause. and then inflation doesn't break we could see more that can it continue look just to look more and more attractive. >> what are you looking forward terms of getting returns other than the short end. are you seeing turns in industrials? or retail like target of the came out with expectations that are disappointing what people seem to be cheering. >> consumer in the end ploy

meant peace of the puzzle that determines the timing of a recession. consumer i think is a risk. we are more on the conservative side looking for quality companies and debate outside the u.s.. companies that tend to grow their dividend. they are more recession resilient and provide protection going forward. infrastructure companies backed by utilities in waste management over to companies like coca-cola who tend to be more defensive in a volatile market. we think emerging markets look attractive. also the dollar may not be as strong as it was last year in china continuing to reopen. kind of a balance there seeming a bit more conservative because of the continued rate hikes we see and the potential for recession. tom: how does use of cash play

in? one trillion in share buybacks, we saw a statement made today define -- we so i statement made today. find use of cash for nuveen. >> they are focused on returning cash to shareholders then pulling barrels out of the ground. we agree oil prices likely have more upside because demand remains reasonably strong. cash is an interesting asset class. my caution, of the markets tend to price in a recovery will before we see any data so it's a timing issue. when you try to time the market is usually a loser's game. i would look for areas where you see good value like non-us markets. also in alternatives. it tends to be more resilient during a recession. looking at historical

downdrafts. and then conservative equities like dividends tend to be more resilient. >> i'd be rude if i didn't ask should we take advantage of municipal bonds this morning? >> fundamentals versus valuations are a mismatch because of the strength of the economy, municipality still looked very strong. fundamentals are strong, valuations are interesting. you see total returns and also areas of taxable fixed income still look very attractive to us. that's why it's important to use your cash wisely. you see entry points that you haven't seen for decades. jonathan: how did nuveen become the largest -- of assets on the planet? >> it's a historic asset class we been heavily invested in all the way back to the ti days.

it's an asset class we thought was resilient and a great asset class as a hedge to inflation. it's important to society we've built it over time. in a world where equities and fixed income have become correlated. alternatives have been a key piece of investor portfolios. jonathan: they continue to be correlated as well. wonderful as always. bonds falling, equities falling. yields up, stocks down. equity futures just about positive this morning. one third of 1% on the s&p. the outlook not great for the first quarter or the year ahead. goldman sachs investor day kicking off. tom: what we are going to do is look at the 118 page powerpoint. i've driven into it and page 63,

executives can come out with platitudes as loaded as you would see any investment firm with the positive. it's a big theme as well. what i would say is the money charts on page 63 where they look very optimistically net charge-offs in the consumer banking rolling over and doing better towards 2025. jonathan: one goldman sachs. tom: that's page one. jonathan: sonali basik coming up to talk about it. >> keeping you up to date with news from around the world with the first word. the supreme court hears arguments on president biden's move to slash the student debt

of 40 million people. republicans contend the president is overstepping his authority. biden put a freeze to penalties on his first day in office. rishi sunak's government has a hard sell. convincing to back a post-brexit deal. he spoke with reporters in belfast. >> i'd like to engage with the parties and it's one of the key parts of this deal, safeguard sovereignty. that's what people were asking for and in the framework we delivered it. i hope it's why people can see it's a positive step forward. >> the agreement is aimed at fixing a provision that imposed a custom border in the irish sea between great britain and northern ireland. target turned in a strong fourth quarter performance prayed they offered a cautious financial forecast. the outlook for fiscal year

earnings is about $.50 a share lower than the average analyst estimate. apple suppliers rushing to move production out of china fall faster than observers anticipated according to one of apple most important partners. the airpods maker is one of the many manufacturers exploiting locations beyond -- exploring locations beyond its native china. global news powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg. ♪

>> we are moving back in growth and inflation to what we would refer to as the old normal. the pre-covid growth rate closer to what we saw in 2015 to 2019.

we think january while it was a good month a warmer and stronger month will prove to be a big anomaly as we go forward. >> global head of fixed income, what a year already for fixed income. the year of the bond and then the bond started to get in trouble over the last month. the two-year much higher. yields a whole lot higher. the story of the bond market looks like this. yields higher a bit on the 10 year. the fx market from a high to a level of 105 -- 10533. futures trying to erase some of the month we lost. positive by about a third of 1% on the s&p 500. tom: with all the thanks we've reported. to see 4001 sort of surprises me given the thanks of it's out there i think it's a lower

statistic. where were we. jonathan: the nasdaq at one point this year was up 17%. >> i take the point we've given it back but i don't get the feeling the correction of the bear market. there is immense ambiguity. we don't talk about that. jonathan: market struggling with this this year. ultimately the gap that's opened up between the bond market and equities doing more to the downside in this big correction in the bond market yields up. equities down. tom: we will have to see. goldman sachs down let me cut to the chase. it's real simple. morgan stanley 1.8. the annual return over the last 10 years isn't up to snuff. there are pressures on mr. solomon but far more pressures on a name you will hear from,

stephanie cowan. it's our job to fix platform systems. sonali basak, there is 118 pages. i got to page 54. where did what did we learn this morning, what has the sell side learned about platform solutions? sonali: it's official it's can it take two years for this business to start to break even on a pretense basis. the consumer business, there are a lot of questions about what they do from here with that business but now there's no subtleties here for goldman sachs today. he walked through the door and there is a big sign that says forward. they want you to try and look forward as they manage through the loss they have to manage in the next couple of years. where are they going to make

money? they say they're asset involved management business is where they will do that. tom: do the securities analysis analysts there and bloomberg intelligence find integrity in their guesstimates out two years for platform solutions? do they believe the powerpoint charts? sonali: today to the extent this is a scorecard for goldman sachs management team, they give you the scorecard high up in the presentation. they've got you at the low end of the returns on equity. but they've missed on efficiency. that's where the rubber hits the road and that's after 3200 job cuts. where can they find more efficiencies going forward. they haven't met one of their three goals. they have again put out new goals. the question is what do

investors bite onto and will this be compelling enough to give an investment thesis to investors above and beyond just meeting the goals that were set out. lisa: what's the road ahead for markets making industry that goldman sachs has moved away from a little bit? sonali: it's a tough environment because as you were alluding to it's not only loan losses and marketing costs associated with that, going up across the industry their big questions about it. another question to ask about what the future is his asset and wealth management. goldman trying to say they will reduce their balance sheet and down to 35 billion next year over some periods of time. they may give a bigger timeframe soon but is that enough to reduce the volatility associated with goldman sachs is a looming question when you have to look

at asset involved management. lisa: how many questions are there among analysts in the audience about the potential leadership of goldman sachs going forward? sonali: certainly there will be a lot of questions. we are 10 minutes away from david solomon addressing investors himself. i've spoken to a few analysts here and they looked at me and said -- there are a lot of questions looming again. a 100 page presentation on the progress made at least since 2020 since the first investment day held at goldman sachs. we haven't talked about the main business in the room, a global banking and trading. that's what they will start off with and tell you maybe they should be rewarded more for that business that has gained share over time. that's where they have been able to show the cost efficiencies at

the end of the day. we will hear from the top leaders in that business as well. tom: the oddest thing to me of this opus is a get the spin at the top and i get -- give mr. solomon credit for the divisions doing well. as was discussed yesterday, they have a problem. how is stephanie going to fix the problem? sonali: it's interesting. whether you are stephanie cowan or mark who was running the asset and wealth business, the story about putting leaders up to a place where they can succeed. stephanie was a former banker who had gone over to run this consumer business and there was a time she was seen as a rising star and potential successor to the helm of goldman sachs. what does it mean for her future here to turn around the story

that given her a two-year timeline to make that business break even at the bare minimum. it's a huge question mark. i would say the trading executive who moved over to asset and wealth and this is the story for goldman sachs for them to lean into. jonathan: sonali bass sick from the investor forum. tune in for her interview the goldman sachs president and coo. tom: absolutely original. i don't know what to say about it. it's so important as she alluded to, so many parts of their business are nothing short of spectacular. their place within wall street, their heritage within wall street. they go off and do this experiment. you and i have gone down in flames with different experiments. i don't see any humility in that

powerpoint about how they move forward with a troubled consumer base. jonathan: are you suggesting it should be cut? tom: the answer is they need to address the line of revenues, the line of charge-offs. some kind of delta they can make along the way. >> there's been a question about the identity of the bank that was traditionally the heart of banking. the two investment banking behemoths that didn't expand into consumer banking. another question is the fact morgan stanley is expanding well with their wealth management. how much do we see something similar by goldman sachs. what's on the flipside of that? jonathan: looking forward to that in the next hour.

patrick of rose advisors on this equity market. that's all coming up in about 30 minutes from now. futures positive with a ride through the month of february as we close out the month of february looking at a monthly loss for the equity market. likewise with yields aggressively higher ever since we got that monster payrolls report. the next stop really is good to be payrolls friday just two fridays away. tom: 270 day report. jonathan: can't wait for that to drop. full outlook coming up shortly. ♪ to where they're going. and at chevron, we're working to help reduce the carbon intensity of the fuels that keep things moving. today, we're producing renewable diesel that can be used in existing diesel tanks. and we're committed to increasing our renewable fuels production.

because as we work toward a lower carbon future, it's only human to keep moving forward.

tom: bloomberg surveillance. lisa abramowicz and tom keene. jonathan ferro in preparation for the 9:00 hour. in the economic formula there is everything domestic than there is foreign which hats to do with imports and exports in trade. it is time to firm up the trade side of things. we do that with michael mckee with data that is important all of a sudden. michael: is important because it is a component of gdp and does suggest gdp baby smaller -- may be smaller than it was in the now cast.

the advanced trade balance from january comes in at -91.5 billion, down from 89 .7 billion in december. it looks like that widened a little bit. wholesale inventories fell .4% which suggests fewer imports came in and retail inventories rose 5.3%, less than in december but more than forecast. we still have some inventory built. the most interesting thing is this wraps up the january data. now that we are in march we will start to get the february data, which is what will play out. tom: let's go to mere mortals like stephen stanley at morgan stanley. or steven ricchiuto. i am only quoting stephen economist. the answer is this is january data we are wrapping up the end of february and all anybody cares about is where we are

march 31. can they make an informed guesstimate now about this present quarter? michael: i do not think you can because there is so much still outstanding and the data we have is just for one month. the fed has until march 22 so there will be a lot of data between now and then that will give us an idea of whether the january strength was the kind of thing that will be maintained or whether it will turn around and whether the inflation numbers are going to ease off or not. it is interesting to see all of the trading in the bond markets. the idea that everybody is moving yields up, that is based on what happened a month ago. tom: the yield revisits where we were the other day. the 10 year and the 395, mi on the 4% watch, i'm not sure? lisa: people have been on the yields at the highest level

since 2007. what you make of the fact that economic data has been surprising to the upside the most since last may. is this because expectations were so low or because the data is so good? michael: it is a combination of both. expectations were low because people extrapolated from previous episodes of what happened when we came out of recession and the fact it takes a while to get back up to speed and people were nervous about spending. that did not happen in this recession because of everyone getting so much money. what surprised everyone is the fact that consumers keep spending. the old days we used to say it never stand before an american and a cash register. that still seems to be the case. they have not run out of money. tom: case-shiller at 9:00, to me it is always important. is it giving you good information even though it is

stated information? michael: it is giving us some information but it does not help that much because it is dated. it is -- it tells us where house prices are going but it is delay late and the fed is looking for more current indicators. we will see house prices continued to decline. tom: michael mckee, thank you so much. further dated today and then into a very busy march. someone who was in a dense -- who was immense help through the pandemic, david page. great to see you. i will cut to the chase. i love one of the words you used, asynchronous, because that is what it feels to me right now. can we have a slow down, but can we have a media recession but some parts of the economy do ok? david: yes, and the point we make with asynchronous is you

can have a slow down and all of the economy but at different times. what we are thinking, we have this nuance coming through from trade, we have nuance through inventory. the consumer looks pretty solid. i think it is as we move into the second half of this year, particularly if we get the slowdown in the labor market that we will see a softening in the consumer side. typically you get a synchronized slow down and that is when you see a recession. if you get it asynchronously, remember we have already had two quarters of negative growth. that was not a recession and that was just last year. we could get a sawtooth pattern of gdp, and i guess that would be a soft landing. tom: german yields are up solidly. i am looking at the 10 year yield. 3.96 is a roundup. that is one story but the other

story is the disinflation. monitor your trajectory of u.s. disinflation. david: we think headline inflation will fall to just under 3.5% by midyear. tom: by bastille day? david: we are a french house. sometime around june. as we move into the second half of this year we expected to stay in the 3.5%. that is why i've always said the fit is not in a position to be able to ease in the second half of this year which markets have repriced significantly now, but we think it takes throughout 2024 to get that down. lisa: when you're talking about and asynchronous recovery isn't that problematic for getting inflation down? isn't a model through allowing certain industries to see price gains that will keep inflation

higher, even as you see the euro for getting more complicated? david: for our view we still see a mild recession. i stress mild. we see this asynchronous growth is slightly firmer than the labor market is not loosening my and it will take longer for prices to fall. ultimately below trend growth, this is the baseline that chair powell talks to. we get the labor market eases a little bit and that is enough to see inflation fall back. we think it will be more than that but that is the risk. lisa: we were joking earlier about how we have a show people coming on and saying we have no clue because this is a difficult time to have a sense of what is going on. i wonder how we can be sure that is enough to bring inflation lower? if we have central banks that are vocally adhering tour to a 2% target of inflation, how do

we know we will not see a 6% fed funds rate and a 4% ecb target priced into the market. david: that is the key risk. central banks are pretty clear they do not know either. the central banks seem to have learned that lesson. the point of that is that now central banks are using backward-looking information to judge when they have done enough with their forward acting tools of monetary policy. they are looking in the rearview mirror. they are not looking too much at inflation, but it is labor market that gives them the long steer as to inflation and they are using that data to judge when they have done enough when they know rate hikes will have a light impact on financial conditions going forward at that is the biggest risk. if you're using backward looking information to judge when you've done enough with your forward acting jewel. tom: beautifully explained and i guess the ex post deed is

becoming more ex poste. the taylor rules are completely messed up. torsten slok models it out almost 10%. bullard is saying let's go. there are others in the ecb saying the same thing. is there value to the urgency that dr. bullard speaks of? david: i think so. the movie would get if you followed a bullard approach is much more consistent with fed history that you can see the rates move a little bit higher to peak, maybe even towards a peak of 6%. once you reach that you would break the economy and you would see rate cuts follow quickly. what the bulk of the committee wants to achieve is a peak that is not quite as i watering as that but is held in place for longer. that provides the restrictiveness that slows the economy. lisa: before we let you go, the

belief in lagged effects come is that enough of the ecb to pause before they see the ramifications of their forward tools? david: know, they need to see some impact. for the u.s. there is not near enough to see a slowdown in economic activity and average earnings growth needs to be closer to 3.5% they will need to see that before they pause. tom: david page, greatly appreciated. lisa: he came here just to experience the one and only real snowfall in new york city. he was saying here you walk-through/. we do not, this season. now we do. tom: we have had a snow this winter. where i grew up this is the second week of april. this is getting in the way of opening day. joe feldman working -- under review off the conference call

but a very constructive outperform and he talks about loyalty programs, about the target method, the execution method they will have. we believe the company is multiyear profit recovery. lisa: to give some perspective of what the optimism is stemming from, last year target had a decline of more than 30%. target was 2%. they had a 35 point 6% decline in 2022 and are coming from a fairly low base and their outperformance this year is coming from that. they were taught of as the gold standard. tom: the execution standard. david: the execution -- lisa: the execution standard for stops shelves. tom: a five-year dividend growth of 11% and i have a visible pe out to 24 of 18. it is not the frothiness, remember how frothy we were?

the frothiness has been taken out. lisa: i wonder if that is the reason people are optimistic and they are out buying shares when others are saying the world will fall when the fed raises rates to 8%. tom: we will continue. nasdaq giving me eight fractionally negative number. a real turn to the market. we will blame that on david page. the 10 year yield 3.94%. we are watching nields -- yields -87 basis points. stay with us. this is bloomberg surveillance. good morning. lisa m.: keeping up-to-date with news from around the world with the first word, i am madison mills. the biden administration has awarded for companies lining up for funding for the u.s. chips and science act. the money will come with major strings attached. it will be restrictions on

investing in other countries and a limit on stock buybacks. the $39 billion are meant to boost semiconductor factories in the u.s.. rupert murdoch testified that fox news news commentators did endorse false claims the 2020 presidential election was rate, that is despite murdochs immediate doubts about the conspiracy theory. rupert murdoch was questioned in the lawsuit against fox by dominion voting systems. fox has denied it promoted false claims about the vote. homebuyers are increasingly paying in cash. according to real estate data analytics firm, their share of all cash deals rose to the highest level since 2013. it was over 50% in 13 cities, including atlanta. meanwhile the number of institutional investors declined , suggesting more regular buyers turned to sell funding to avoid higher mortgage rates. chevron is showing confidence in

its ability to generate cash, even after a 30% decline in oil prices. the energy giant will repurchase stop at a rate of $17.5 billion annually starting in the second order. previously chevron planned a $15 billion buyback rate. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. i am madison mills and this is bloomberg. ♪

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that creates economic uncertainty and creates economic volatility and that creates dispersion. tom: luke ellis of man group with good data. we will have to follow that carefully. now with futures up four, just a churn to the market. a vix under 21 gets my attention. the 10 year yield 3.94%. lisa what is the single statistic you are watching? lisa: i am watching the housing market and it is interesting following torsten slok, if you see a real acceleration or not a decline as much as people think, what does that do to this feeling that component of the inflation reit will go down consistently throughout this year. -- the inflation read will go d own consistently throughout the year. tom: we thought we would speak to global wall street and with great respect to the heritage of goldman sachs and the challenges

mr. solomon has faced after the tenure of lloyd blankfein we thought we would bring in an adult to explain what is in the ether. ken leon joins us, director of equity research with decades of exposure. is this any way to do business. cfa, you got a john deere annual report, maybe you got something else. now we have 118 page powerpoint's with a welcome from mr. solomon, the state of the franchise from john waldron, sonali basak will speak with john walter at 12:00 at noon, and then we have one goldman sachs. is this a branding exercise or to guys like you learn anything out of these soirees? ken: it is great to be here and goldman is probably best in delivering messages at roadshows. that is what they do as an investment bank.

it is all about what they are doing right and then they will get the hard questions later. they speak to client franchise and essentially this means that everyone wants to do business with goldman, particularly the investment bank and also asset and wealth management. what is interesting is there are a lot of hard questions about their strategy from three years ago to button up shareholders. they got a $30 billion authorized buyback and they are talking about appellee push and see because they are still a regulated bank. tom: from an amateur, stephanie cohen shows up at page 54, and what she says is can you give us two years to work this out. is that how you read it? they are saying we need 2025 hope and prayer? ken: that goldman brand was

supposedly going to conquer the consumer market and it did not. that might've been too confident and it is block and tackle the next two years which will be profitability and return of capital. the missing question is that is great to be a great investment bank, but to be a great financial service company you have to have recurring revenue, work through the cyclical parts of the market. we are talking about schwab, blackrock. morgan stanley. goldman sachs still is an agent. it is dependent on client servicing. that is difficult to get a higher valuation. at the same time i do not think they will make any big acquisitions. right now they want to have a calm where they can tell shareholders will be more efficient and use less capital and we will find ways to be profitable and be smart.

lisa: there is a big question within this which is how will they expand more into that stable kind of business without making acquisition without making major investments and without playing out any kind of path to do so in this presentation. ken: when you look at their presentation is not going bigger and deeper and terms of asset management or alternative investments. it will be more the wealth management side, the advisory side, and areas like larry fink had, which is getting the ishares with etf. in time when they need to look for more predictable recurring revenue stream and a lower source of funding, it might be some of the custodial banks or even state street, which has a great etf franchise.

goldman would never look this way but the market is saying even if you execute and have several quarters of great earnings out of the investment bank, we are not going to give you a higher multiple. that is the conundrum they have and those are the questions that will come up tonight. lisa: there is also a question about this existing consumer facing platforms. i'm thinking about marcus as well as credit card partnerships. right now the wall street journal is reporting that david solomon was saying that goldman sachs is considering strategic alternatives for its consumer platforms businesses, including green sky and the credit card partnerships with apple and general motors. does this mean they will reduce their footprint and sell some of those businesses in the near future? ken: if it is any of the businesses that require significant capital the answer is yes. for others which is transaction driven and they can leverage with partners, they will

certainly find ways we could be incremental revenue and profit. the big play is over. tom: i looked at the first grade chart and they go against their leading peer, which is campbell soup, a minestrone soup of this firm. the leading peer group compare is morgan stanley. what did james gorman get right? ken: james gorman did not goa far. he was looking for adjacent markets like the workforce 401k. he paid premium but he got legg mason. he got established businesses versus sitting in a room and saying we have the best brand, which is goldman. we will create businesses. it is very hard to do in financial services. that is the difference. tom: a brief from the esteemed ken leon.

i love talking to people with decades of experience, that have seen the morgan stanley really ugly period they had 20 years ago, 16 years ago, whatever. the cycles that ken leon has lived is a big deal. jonathan: there used to be -- lisa: there used to be a race between goldman sachs and morgan stanley and goldman sachs was always on top and the equation has shifted. people are looking at that and wondering how much of that is driven by the global wealth judgment business at morgan stanley and how can goldman sachs get that back. what is the base that will drive that revenue? they are saying they will make the margins bigger in their wealth management unit and some of the headlines are trickling through. fundamentally if it is not consumer banking and they will not make acquisitions, how they do it? tom: i will push back on that. i look at the powerpoint which i

think nicely displays the goldman sachs excellence. credit suisse cannot do this powerpoint. they do not have the platforms to deliver m&a and ecm, i do not know what the alphabet soup is, but they are number one and number two in everything. i think through the day to hear from the different analysts such as mr. leon is that is platform solutions and they have to address that. i am glancing at two quick powerpoint pages, there but is can you give us some hope and time to 2025. is that modern wall street? lisa: modern wall street is banning chatterjee pt. i wonder all -- chatgpt. david solomon was talking about how he tried chatgpt and a lot of the banks are banning it. what are they do with artificial intelligence? how do they use these tools to

make people more efficient. tom: you are worse than jon ferro. lisa: but also prevent something from happening they do not want to happen. tom: it is no different than tiktok or weak lack -- or we chat. it is a compliance nightmare. lisa: the concept of artificial intelligence is not because of used correctly it could put you on the front foot of new technology. as a bank required to keep certain information safe howdy be technologically savvy and efficient without compromising safety. tom: there is a crypto headline. lisa is getting me going. i'll have to take the surveillance nap after sonali basak. in conversation with the president and chief operating officer of goldman sachs. look for that at 12:00. on radio and on television, good

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jonathan: closing out a tough month of february. live from york city, good morning. equity futures trying to bounce by .1%. the countdown to the open starts right now. >> everything you need to get set for the start of u.s. trading. this is "bloomberg: the open" with jonathan ferro. jonathan: live from new york, coming up bonds slide as european acceleration. goldman investor day kicking off new york and target delivering a cautious f