jon: welcome to bloomberg markets. kriti: let's dive into the price action because we have a selloff after we heard chairman powell's testimony in congress. he says he wants higher for longer because he wants to tackle in laois and in the bond market says that's old news but the equity market is taking it on the chin. the vix is still at a 19 handle. when does that change if we see more hawkish rhetoric out of the fed.

the 10 year yield is not doing much but -102 basis points is where we are at. we saw it back in the 1980's and the dollar is where you are seeing the action, a stronger dollar by almost 1%. jon: in the sectors, notable weakness for financials right now. j.p. morgan is off about 3% on that news, struggling in the face of those comments. not all stocks or week, some of the airlines are getting a nod from certain wall street analysts. ww international, the former weight watchers has been hot, close to 50% up, opening the door to possibly be in the prescription weight loss drug business. rivian stock is on the move. some of the movers we are

watching at this hour. kriti: a pleasure to have you back by the way but a lot of eyes after jerome powell testified in front of the senate bank's committee today. >> the latest economic data have come in stronger than expected which suggests that the ultimate level of interest rates is likely to be higher than previously anticipated. if the totality of the data were to indicate that faster tightening is warranted, we would be prepared to request pace of rate hikes. jon: let's get some reaction, joining us from washington with more is michael mckee. one of the things you were saying this morning ahead of the testimony was we've got some key data points as we rolled through the week, the jobs report friday looking ahead to cpi in the week ahead, how much would powell be able to say if the fed is data-dependent? what is your take on what he had

to say? michael: i look at it as he said what he had to say and what should have been anticipated. the fed's data-dependent and they've said that and the data has come in stronger so they will probably raise rates higher than they had earlier anticipated. how much higher is an open question and how fast. the jobs report on friday and cpi next week, there are many reasons why the fed could change its mind again. i think that's white jay powell's quote was the totality of the data. it leaves them a big hole, if it comes in soft, they can go 25 or of a comes in higher, they can go 50. what you want to do is check back at 831 wall st time friday. kriti: let's talk about the pricing because we are seeing for interest rate hikes were for 25 basis point hikes placed in for the rest of the year.

have we completely died on the idea of rate cuts this year? michael: i think we have died on the rate cuts. they will not cut rates even if the economy reverts back to its pre-january numbers. they will hold rates high to try to get inflation down and despite their progress, they are a long way from 2%. we will not be cutting rates but the question will be open about whether they do another for 25 basis point and whether they go up to 5.75% or 6% and we will know more by the end of next week in terms of where they think they are and we will get a new dot plot on march 22 and that will tell us whether that move that we saw today is justified. kriti: bloomberg's michael mckee, all over what's in a very exciting testimony out of

congress with chairman powell. let's get more perspective from seth carpenter and joining us is the cohost of the closing bell, romaine bostick. on the march 22 meeting, a lot of emphasis, 50 basis is now priced in, what matters more, the 50 basis point to the fact that we are going a step up for the margin of the move? >> that's a great question. the market definitely reacted to the openness jay powell show to adjusting the pace of moves and that shows how much uncertainty there is and how much there is on the table in terms of the totality of rate hikes. i think it won't matter a lot to markets if it's 50 basis points. it's not actually that much data coming in between the march meeting and the may meeting. i think that will there will be a predisposition that if they do 50 in march, they will do the same in may. i think that's part of what you are seeing with this rate move.

romaine what is being communicated by a step: back up to 50 at a time when people question why they took that step down to begin with at the last meeting. what to they do to make that right when it comes to the communication going forward? >> the first thing that's important is what michael mckee said-- we've got important data between now and the march meeting. we got payrolls friday and our u.s. economic team has 190,000 as the base forecast in the bloomberg consensus is around 225. an upside surprise there could be the thing that cements the committee's mind on doing 50 in march. if we are right, they would be circumspect and hopefully it would be 25 and there was always -- it's always tough to imagine back -- four months but we

always get downside surprises in the payroll support and a downside surprise could keep them at 25 basis points. we have to get to march first and see what the data told us between now and then to see if they do 50. what they would tell us is we are serious, we want inflation to come down. the path to lower inflation in the fed's eyes is through a slower economy. the rate hikes they have done so far don't appear yet to have done enough to slow the economy to the degree they think will put permanent sufficient downward pressure on inflation. kriti: let's talk about the cpi data we get next week that if we start to see this one way streak lower of disinflation get turned around with an uptick in the european economy in other markets, does the 50 basis point priced into the market potentially go higher?

>> i think it would be hard to see them do more than 50 basis points again but nothing is off the table. 50 basis points, you do a couple of those and it's easy to see getting six percent or higher. my strong intuition is they would believe that 6% on the fed funds rate would be more than enough to slow the economy. it's a question of how quickly they get there and how much resolve they show to markets about their willingness to bring down inflation. romaine: there's been a lot of discussion about what it takes to get down to 2% and whether maybe they need to raise that target if not officially but certainly to signal something that is a little higher and may be more attainable than 2%. do you anticipate that discussion will be had at the next meeting and if so, do you anticipate that could be a realistic change? >> i do not anticipate that being a topic of discussion.

chair powell has brought lots of clarity to this with the 2% inflation target and they want to stick to that. i think there is wiggle room. it's a question of what the time horizon is to get down to that 2% inflation target. it seems forever ago but in december, they gave us their economic projections. the median fomc prediction had core inflation at 2.1% at the end of 2025. at that point, it was three years officer with three year time horizon to get down almost to target, that's not changing the target but it's showing some patients in how long it takes to get there. romaine: i'm curious to see what the debate looks like with new voting members. there are a couple of vacancies out there as well. you have seen some of the reports and there was a short list to replace lael brainard.

it includes many candidates. have they approached you about the job? >> i can say with complete conviction that those candidates are fantastic economist and any one of those would be great in the job. kriti: seth carpenter of morgan stanley, you can watch every day on bloomberg markets. romaine: did he answer my question? kriti: i don't think he did but that was on purpose. we think you as always for joining us. coming up, meta-is set to be planning layoffs this week and we will look at what it means for the state of the jobs market and whether it could influence fed policy, that conversation next. this is bloomberg. ♪

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>> the fed is doing their job, trying to tighten financial conditions but the problem for them as we have the bank of japan and the eeoc adding liquidity and a dollar that is softening which is neutralizing the fed's goals of tightening financial conditions. that's also breathing life into assets. we're confident between now and the next earnings season, that will be when we think the next bear market decline happens. it will be a more meaningful decline, 10% or more. kriti: this is bloomberg markets. you are listening to mike wilson of morgan stanley. he was speaking about the economy broadly. our stock at the top of this

hour is meta-with thousands of layoffs possibly as early as this week. ed ludlow broke the story and joins us now. this was supposed to be the year of efficiency for meta-platforms according to mark zuckerberg area it follows a 13% layoff and december. ed: according to our sources, the pitch for efficiency goes deep. these are new layoffs of 11,000 that came to the end of laster and are separate from the flattening that meta-has been going through, but tickly middle management. sources tell us and staff are drawing up lists and those could be converted to actual layoffs and one reason it could come quickly is because mark zuckerberg is due to go on

parental leave. he is expecting his third child with his wife. what we are hearing from one source is that there is pressure on drawing up those lists. jon: helpful context, when people see the bottom line focus at meta-, they think about the challenges in the advertising market but you have been zeroing in on the challenges with the reality labs business. >> yeah, when it comes to the stock specifically, you have to think of the negative estimate revisions we have seen over the last six month. what they are trying to do is use the cost levers they have and that's why, first it was the initial round of job cuts and now another round. they were in a $10 billion hole this year and they are expected

to lose $14 billion this year. the base core is they have levers and even though their top line is slow to rebound which is a base case, i think any acceleration would be a 2024 event. jon: in terms of the company navigating through all of this, layoffs are very sobering and you have been talking to sources about morale in the company? ed: my understanding is morale is pretty low, probably worse based on the conversations we have had. even though the company is still very large, 11,000 jobs being cut in one fell swoop is pretty severe. a lot of meta-employees lost friends and longtime colleagues and managers. in the case of the flattening, they are saying there were too many middle managers and not many people actually doing software engineering. they offer the opportunity to

many of those managers to become contractors or contract workers and many declined and left of their own volition. what i was told by a source last week was that the price cuts to the headset is because no one's really buying them right now. these problems are much broader than saying there is been a slow down and they are feeling the slow down in terms of demand for the headset and they are being held to financial target. we don't know what the financial targets are but that's why there is new impetus to do deeper cuts. kriti: let's talk about the financial targets and the bottom line. talk about the investment that meta-is putting going back into the metaverse. how much of that branding is still being's pursuit? >> they are and that's why think they are very aggressive on the capex side of things especially when you talk about generate of

ai. that is one of the biggest things out there in terms of making those investments and it can have a big influence on the evolution of the metaverse because when you think of all these applications in the amount of data they generate, it can have a big influence in terms of how the content gets consumed. meta-is one of the companies out there that spends aggressively on its data center footprint. i would argue that almost 40% of their data sector has that kind of capability and that's a big thing when it comes to infrastructure advantage they have over their competitors. jon: one of the things mandeep spoke about is there is a view on wall street that perhaps this tiktok challenge in the u.s. could benefit part of the meta-business better than instagram. ed: his view is shared by many

of his colleagues on the sell side but the crackdown from a legislative or regulatory perspective on tiktok is a used for meta-and snap, meta-is going hard into a femoral video, the video-based platforms and video supported opportunities for ads so the street sees that as a potential boost for the company in the long-term. jon: something to watch there, thank you both so much. coming up, the canadian government is changing its foreign investment laws and that could impact companies in the mining industry. we will have an on the ground report next, this is bloomberg. ♪

jon: this is bloomberg markets. the top leaders, policymakers and energy have been gathering.

alix steel is also on the ground covering the story. she spoke with the ceo about the demand in the metals industry. >> we have low inventories in metals and increase demand. we've got robust demand in europe as well. historically, we are seeing china has been the driving force. the increase now is coming from developed economies which is part of the energy transition. it's a very different set of parameters. what is the release valve on that? higher prices. alix: it sounds like you are looking at a global synchronization of growth. >> yes, one of the drivers behind that growth is demand but it's demand for energy transition. you've got a lot of infrastructure and ev production and battery production and general construction taking

place. these things have a positive impact on metal demand. ultimately, with the low inventory levels we have on prices. jon: we are in conversation with alix steel -- one of the mining industry's biggest conferences is taking place this week in canada. the crackdown on china is getting a lot of attention. canada tightened its investment laws which could complicate production for many companies and andy bell is on location in toronto. what can you tell us about the reaction to canada's crackdown? andy: robert friedland set the ball rolling this week. he is the mining tycoon in the mining industry. he said that the decision to force chinese companies to sell

their stakes in small lithium companies based in canada will make it harder for mining companies to raise money. he warns that the prospect of conflict over taiwan is no way to go forward and he says china is a source of financing for the industry. the industry minister was quick to respond. he said we are going through with this. i am a hawk when it comes to national security and defended the decision. it has created a stir in the mining industry. it's a pretty aggressive action by canada last november. kriti: even with that sentiment, is there any optimism around the industry now? >> oh, yeah, there is so much copper needed in the years to come. that raises another issue, we no massive amounts of lithium will be needed and rare earth metals but china has locked up the processing of that stuff and it

may be reduced around the world but in many cases, it has to be shipped through china. although we are rejecting chinese investment, it's not new. back at the end of 2020, they rejected she'll -- they rejected a deal by another company to get control of a portion of that industry. they said a chinese company could not by a construction company. it still raises questions. china is a big shareholder in tech in vancouver, one of our major mining companies. china is also a big investor in ivanhoe mines in mining. they are based in the democratic republic of congo so china has put a lot of money into the canadian mining sector. our stock exchange has said there are concerns over the speed of this move in the transparency as to how the

decision was reached. kriti: a lot to digest there. it's fascinating. thank you as always for the update. we are looking at markets lower on the day and more market coverage ahead. this is bloomberg. ♪ avalarahhh ahhh ahhh ahhh was also the first time you realized... we can do anything. cheesecake cookies? [together] the chookie! manage all your sales from one place with a partner that always puts you first. godaddy. tools and support for every small business first. so... i know you and george were struggling

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romaine: the totality of the data driving the market slower. jay powell has spoken and now the market reacts. i'm romaine bostick along with scarlet fu kicking you off to the close. scarlet: that is a lot of red on the screen. sending the market a reality check again. romaine: again. we have been here so many times before. the most optimistic scenarios and jay powell has to say, i said what i said last