jon: welcome to bloomberg markets. scarlett: let's get a quick check on the markets. we had an inflation report that failed to move the needle as what it means for the federal reserve and reinforce the idea that sentiment is retreating. looking at yields on the short end, little change for the two-year.

crude oil is the big mover across asset classes. wti fell below $69 per barrel on plenty of supply after opec plus made its production cuts. we want to take a look at the 30 year treasury as well after its auction. we saw a bit of a rally across the longer end of the yield curve. jon: you mentioned the weakness of the price of oil within the s&p 500. energy stocks are having the toughest day. we talked about occidental and macy's yesterday. they are a great example of a stock under pressure today with the energy price down near the big acquisition announcement. we are seeing shares down 7% today. citibank feels there is buzz around that might not come

together so weakness for those stocks now. in the technology sector, we've been focused on oracle and the challenges and satisfying expectations in the latest quarter with the sales -- with the cloud picture not inspiring investors with shares down 12% and lucid had a cfo departure. that stock is down about 9%. we will talk more about the road ahead a little bit later in the hour. scarlet: when it comes to today's u.s. inflation report, victoria fernandez explains what the data means for policymakers. >> the key thing that jay powell in the fed will be watching is that the core number did not move. we are still at 4% so the market and investors that have the belief that inflation will continue to fall rapidly and the fed will start cutting rates, i think this might be an eye-opener to say that maybe we need to take a step back.

scarlet: let's take a step back and look at moves in the bond market following the 20 one billion-dollar auction of 30 year treasuries. we bring in liz mccormick. the 30 year bond auction was fairly well received in contrast to the sale in november. tell us what that tells you about investor willingness to take on duration for the fomc decision and new economic projections. >> like you said, it was a good auction, mostly relative to the terrible five basis points we had last month and the three and 10 year were not good. the fact that the government could sell 30 year paper in the bid to cover was better than the recent averages. there is a different buyer base for 30 years. i think many of them are thinking that these rates are

probably the best we will see in a while. it's the peak rate theory. it's good treasury got that off. there is a lot of event risk tomorrow with the fed even though they will probably not do anything, we want to hear what jay powell says and what the dot plot says so there is a lot of filter roof but it was a relief of these three auctions. rates have been all over today but the short end is about flat and long-term rates are down. i don't like to predict because then -- but then things blow up and maybe we will become the rest of the day. jon: let's talk about what we know today in the way people updated their earlier expectations on rates from here based on the latest inflation data. what played out this morning? >> today's date at which was fairly close but a few bits like the core services were hotter than expected drove people to

tamp down how much they see the fed easing next year but not by a ton. that may be 60% chance of a march cut coming, now we are down to a 40% likelihood. in the fed's camp, they say the job is not done and we will get there. they say we will not pivot any time soon and that's how the market factored in. it wasn't game changing but it didn't and gender rate cut bets by a longshot. scarlet: really appreciate your joining us. let's continue the conversation he get more insight on bonds. let's bring in the chief economist at nationwide. good to speak with you and as you heard, i'm curious to get her take and this cpi report is something that's the idea that

there is no rush to cut rates are hike rates. >> happy to be with you. i think that was framed quite well. it's sort of benign. i don't think it really did a lot to change our view of what the fed will do but the markets i think got a little far ahead of themselves pricing in modest cuts and that was ray to premature. the rate odds for a cut in march of been reduced to less than 50%. somewhere around mid year seems meet -- seems reasonable to me to think the fed can start to remove some of the restrictiveness they have in the policy rate. yes, your question of whether this supports the fed view that let's take this slower, i think that's right. i think the markets just got too far ahead of the data.

scarlet: that's a regular occurrence. we've seen the market move ahead and i believe this is now the sixth time and people have been wrong each time. what is it about the strength of the economy were the bond rally that they keep expecting we will see lower yields on the back of a rate cut fairly soon? >> the market has been very eager to price in this eventual pivot towards easing. i think the strength of the economy has surprised in the labor market is feeding into income and that feeds into consumer spending. on the other hand, inflation has come down faster than many thought. that kind of drove the market expectations that may be we are done. the fed not this early could

declare victory but turned the corner. what we've seen is inflation has to climb quite nicely. it will still be sticky especially in the core services components like transportation services. if you look at rental inflation, it's still running quite high, up 7% year-over-year. jon: what tone do you think the fed wants to strike tomorrow given all those data points? >> it's a really tough call for the chairman. once we acknowledge there has been great progress on the inflation front and they have led some of the air out of the labor market with crushing employment growth. at the same time, they recognize we are not there yet.

mission is not accomplished and we don't know how long it will take. there is still some stickiness. he's got to balance both of those major factors. he needs to get across to the market to encourage but not quite ready to signal any imminent rate cuts. jon: we were just looking at the intraday trading and oil. how does the central bank think about what's happening at those prices as an input in the broader inflation story? >> i think on one hand, they are quite happy that oil and gasoline prices are going south and it helps with the headline fight against inflation. on the other hand, it symbolizes weaker demand. that gives some insight as to

what's happening with domestic activity and globally. i think that underscores this risk. they want to keep rates restricted for not too long versus cutting rates too soon. this gets back to that balancing act. jon: good to have your time. coming up, the bmw north ceo joins us to talk about the automakers ev ambitions, this is bloomberg. ♪ - [mo] if you're thinking about going back to school, this is for you. ♪ - i ended up spending less money my entire time at snhu

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jon: this is bloomberg markets. time for our stock of the hour

we are keeping an eye on ford after the automaker is cutting its production plan for the f 150 lightning in half for next year. this is their signature electric vehicle. it highlight some concerns right now heading into next year on the ev sales. there was a report this week that said sales growth in that area of the u.s. has slowed to 11% from an estimated 40% this year. scarlet: it's the charging restructure that's a work in progress but also on a day were we got a remainder that inflation is rising 4%, ev's are more expensive than traditional gas guzzlers. jon: jim farley of or talked about the reality, the charging reality, they cut that deal with tesla for the superchargers and on top of that, the question about the cyber truck. we don't know how it will sell next year but bloomberg has

polled analysts and they say 78,000 vehicles have been sold which is competitive for ford so there is a lot of considerations we will watch. when you want to continue the conversation, matt miller is with the mat -- is with the bmw ceo. matt: sebastian max is with me in the studio. let's talk about electric demand. bmw was a pioneer in the electric space with the i-three years ago and you just release the i5. i was lucky enough to spend time with the i7 so you have a huge pallet of offerings. how is the demand looking to you? >> is looking very strong. it's a process where we are in the process from 2022-2024. it's a longer term position. we are very happy with the place we are we offer four different

vehicles which we offer in the marketplace and four or five by the end of next year so the main segments and we see growth in those segments we think we have a strong product offer which customers matt: are enjoying. i saw that you had a jump in sales for sedans and a drop in sales for suv's. for most carmakers, i would think that strange was your electric offering accepting theix is in the sedans face. is that part of the reasons why you are selling more cars and trucks? we are reviewing this trend and their trucks are very sought after from global markets. we almost have to be in a battle with other markets where the vehicles go. the i4 has been strong this year and that builds on the demand on the sedans side but the suv segment but they stay very strong this year. matt: you produced mainly all of

those here in spartanburg. is there any plans to move some of that production back to germany? i saw mercedes is moving production of the eqs back to germany and i thought maybe you could do this 7 -- do the same. >> there is no plan to do that. spartanburg is our main thing. it's over half of our business for the u.s. market. we would rather invest further for future generations of those vehicles and no plan to relocate those production cars. matt: you are the biggest automotive exporter in the country. you will be building more electric vehicles at least that's what you said previously. do you plan to make six fully electric eagles by the end of the decade? >> absolutely, we made the investment decision about a year

ago when we announce it in november of 2022 in spartanburg. that is the plan. it's well analyzed and thought out and this is where -- what we want to stick to. currently, the work is happening on the ground of additional facilities. . we would obviously use them. there is one interesting additional point to this, he we have a flexible production structure so we build electric vehicles and non-electric versions of the same vehicle. with an approach to open technologies, we have good flexibility in the system. matt: i'm trying to gauge your commitment to electric vehicles with so many talk about demand not as strong as people had expected. a lot of automakers are pulling back on their investment plans so what does a look like it bmw? >> we have to be careful how we

interpret that information. is there a growing market for electric vehicles? 100% yes. is the growth on the same level as maybe some experts have estimated a year ago? maybe not. the important part is what is the gradient of the growth. we'll there be growth for better electric vehicles? absolutely. matt: you currently have 12% of your total sales all electric. if you add in plug-in hybrids -- >> 20%. do you expect that to rise into next year? >> yes, we share on a better amount of electric vehicle sales next year. i cannot talk about the exact numbers but we definitely see a higher share in 2024 a me think we will see an even higher share in the 20 -- into 2025 as well. matt: bmw was one of the first

international luxury carmakers to come here in the early 1990's. it's not union and now that we've seen this drama unfold with the uaw getting their contracts, are they coming to your shop or have they called you up? they would probably not call me up because i have a very esteemed colleague spartanburg was -- who is running bmw manufacturing. from my point of view, we have a huge success story as you mentioned. it started in 94/95. you need good employees, good talent to grow the business and build excellence out of the driving she's. i think we treat our employees the right way. matt: but you don't expect the union to make an approach or be successful? >> i cannot judge what the union will or will not do.

i think we have a great relationship with all of our employees and we are planning for success in the future as well. matt: i want to ask about something quirky. you recently put manual transmission in the z four. a lot of people are worried that manuals will die is what's is soon but the take rate has been kind of hybrids twin brother. jesus picked them model to sell? >> i think there will be many aficionados who want to go with the manual transmission. it is still how a lot of us, my generation have learned to drive a car. it definitely has an additional feeling of control of your car. at the same time, when you drive long distances or drive in city traffic, you also get to appreciate the advantages of an

automatic transmission. the first feedback on that vehicle was positive. matt: i'm a huge fan of the stick shift but i also love the five series. it was the first time i was in a car where i could take my hands off the wheel. how long will it be to we get to self driving cars, fully automated? >> i would like to focus on what we offer today. we don't offer that only on the autobahn in germany but on the highway of the united states. yesterday, i drove home in my i7 and i enjoy that function. we call it ice on the road, hands off the wheel. you have to be able to take over at any moment but it's unbelievable how much more relaxing the driving is at the car does certain things for you. this technology will advance

further and we will see over the years how much it develops. it's definitely a great feature already today in the market. matt: anna elliott has a great review today. thank you for being with us. scarlet: we can't wait to see you do some hands-free driving on the streets of new york city. matt: i will stick to the bronx river parkway. scarlet: coming up, the google legal defeat might upset the game ecosystem for apps. this is bloomberg. ♪ 3

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time for today's for what it's worth. how about $200 billion? it's estimated that spending atop that amount the next year and the legal fee for google could threaten how much of that spending alphabet puts in its pocket. in a high-profile,this ruling opens the door to the end of up to 30% companies like spotify, g commissions for certain developers which didn't go over too well with the judge. jon: we will have to watch and see what that looks like and we

will watch how congress feels about the app store economy going forward as well. i am jon erlichman, this is bloomberg. ♪ the first time you connected your godaddy website and your store was also the first time you realized... well, we can do anything. cheesecake cookies? the chookie! manage all your sales from one place with a partner that always puts you first. (we did it) start today at godaddy.com

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>> no one said fighting off inflation was going to be easy. i am romaine bostick. katie: i am katie greifeld. we're are looking at a small valley. building on music games, up about .3%. big tech is doing even better at about half a percent at this moment. look at the don valley in the wake of those inflation figures