>> welcome to bloomberg markets. inflation, inflation, inflation. prices are jumping, likely delaying any price cuts expected by the market until later this year. impacted by this move, the s&p 500 down on the day. the nasdaq 100 down about 1.5% on the day.

the dollar is back on the rise. taking a look under the hood. >> not surprising, we have a lot of red on the screen. not after a 100% rally over the last few days. plus, mentions of nai chip. the biggest drags on the s&p 500. not for any particular reason except for the hot report. the consolidation, major consolidation of the recent maui speaks to the degree of the risk off tone. all 11 sectors are lowered.

the best health care -- that is risk off because investors are going that way. financials, utilities and real estate are down. their dividends do not look as good as yields pop higher. there is a bearish divergence happening. a little bit of a bumpy ride and then a rally. the momentum indicator has been going lower. the record high was made unless bullish momentum than we had at the end of last year. not entirely surprising that we are seeing this kind of a pullback. >> there are also some legs to this selloff. you are seeing it steam on the

day. now up about 14 basis points higher on the day. but is stunning is that you are seeing that selloff along the side of the curve. a 10 basis point move over there . so far, the 20 year yields moving higher. all of this leads to little more of an inversion. we will talk more about that with reade pickert. when we looked at the inflation data, let's talk about some of the ugliest moves. >> when you dig into the details, one silver lining is that we continue to see this good see inflation but also a/v acceleration in services. we saw housing cost pickup and

stripping out energy and housing costs. we saw that rise at the highest pace because of increases in medical cost and transportation costs. it really validates the caution that we have heard about wanting to see more data that it is on a sustainable path. we even heard last week that they not only wanted to see this inflation trend sustained but also broadened. except -- instead we saw a be acceleration in their visit. >> you are feeling the pain and you are seeing the survey showing you the pain that wall street is feeling. what is the difference between what everyday americans are feeling and the stock racket where it feels like companies

are more insulated from that pain that is felt more broadly? >> a lot of americans look at the price level rather than the change in price growth. and thinking about what prices were years ago. but when you do see grocery inflation pick up and you do see other elements really starting to weigh on household budgets, it adds concern to how much inflation stays top of mind for americans. what they want is people to stop thinking about inflation in their day-to-day lives. we are not there yet. >> julianna is a former federal reserve member and julia, when you look at the inflation issue

that we are taking a look at today, the surprise that hit wall street, how do you pair that against a strong economy? is it going to erase some of the optimism that has been seeping into markets? >> i was just a staff member, not a board member, but the market has been in a mood of very significant mood swings all through last year and they will continue this year. january data in particular is more subject than the usual two of noise. it is not surprising that a market already feeling bearish man with this upside surprise. we are less concerned that this is going to mean the fed will never cut rates or that the economy is the economy is accelerating in an inflationary way.

productivity has been really strong. that is what led growth to be strong even as inflation moderated. companies seemed convinced. but it is not inflationary. we are confident that we will see inflation moderate, but the market is going to need more hard data showing that before anybody is ready to pull the trigger. >> how do you think the market is assessing what is happening in the economy? there are these knee-jerk reactions from traders before seeing the data coming to the surface. do you think that has created conflict with the tightening of financial conditions? when does the market finally catch up? >> i do not think we will get a

neat resolution this year. i think the mood swings will ebb and flow. taking a step back and looking at the economy, one of the reasons why there is so much confusion is that it does not fit our models very well. we had an above -- inflation falling precipitously and a labor market staying strong. it is also harder than inflation to forecast. they are not super confident saying that they will bank on productivity continuing to grow rapidly rather, they will want more evidence that inflation is closer to 2% before they initiate a sequence of rate cuts. they feel like they have time to make that decision because of the resilience he and the

economy. past results are not predictive of future returns, so the fact that we had a spectacular 2023 does not guarantee a good 2024. they will need to keep their eyes on indicators. they had been tracking stronger early in the year and they do not seem to be in a rush. >> how do you see the risks over the next 12 months? >> i think the risks are actually quite balance and maybe more skewed to the downside of their forecast. they did not extrapolate the rate performance that we saw the second half of the year but bill in backtracking so that rates stay higher for longer.

this is the idea that the last leg of inflation is the hardest to cool off. we see risks more with that momentum beyond the january bump continuing. one of the surprises in today's report was sheltering inflation, but only -- rent continued to decelerate. once we get decelerating housing inflation, it will really move the needle. several of the more hawkish participants have noted that, that they really want to see that manifest itself in the data before feeling more confident, that their confidence hinges on broadening goods into services, as you previously noted. i think we are likely to get that. we could see inflation coming

below the fed's forecast and it will give them more confidence to move ahead. >> very sorry. thank you for your time. we will talk to expedia ceo on the outlook and the change in direction. stick with us. this is bloomberg. ♪ an ever-changing landscape comes with challenges. from our vantage point, we see opportunities. as a top-ten real estate manager, we harness the power of a 360° perspective, delivering local insights and global expertise

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>> this is bloomberg markets. it is time for a of the hour.

shares of expedia jumped. the analyst expects 2024 revenue to grow percent and show expansion. we will discuss it with the ceo of the group saying he will step down as early as may. when you think about how the stop reacting, how do you tell the story? -- how do you resell the story? >> we have been working on our brands to leave for the future. that is the work i was focused on. the contract is up in april and we felt good time for a transition. if they want to sell us their stock back, we will buy a but we

feel good for how we are set up for the new year. >> one thing investors are concerned about is that move from post-pandemic travel spending to a more strapped consumer dealing with inflation again. how much do you believe that revenge spending could subside? >> i think we had robust growth out of the pandemic. a new part of the world would open. the last kind of slow down and now asia will slow down as well. we expect travel growth to be solid. and the good thing is, we were doing all the hard work on ourselves during that period. we feel really good about where we are in terms of experience. even if the tailwind is not

strong, we are in a good place. >> another company reporting today is airbnb. how would expedia respond? >> there has been plenty of competition in travel for a long time. the nice thing for us is that we spent three years rebuilding ourselves and those companies have been going steady which has set us up and all the things. we think we are set up competitively very well. others will do well. >> rewards, right? we were talking about the pain they may or may not feel. how much do they matter in

something like this? >> rewards matter to our customers. it is about service benefits. we are really focused on getting members into our universe because they get a lot of benefit. we have package deals to go further. we are confident it will remain strong. but there are a lot of ways to make the dollar go further so we feel really good about that positioning. our forecast travel will be solid. >> i'm sure we have all felt that skyhigh costs. how much to get people back on the road again? >> car rentals got super crazy

during covid and now the prices have come down considerably. we are seeing units go way up at the price coming down. domestically first in the u.s. but now it is starting to spread. there might be growth in price but it is slower. lodging seems to want to hold for now. you'll see pockets of pressure. you might not get many breaks anytime soon. >> a lot of companies are talking about aia. what does it do for cost? >> what we have been focused on is putting ai throughout the front end experience. we can deploy it across our brands. what it does is from discovery,

you searching through chatgpt and how we service you. all of that is enabled. on the efficiency side, we are looking at the call centers and helping our representatives do things through the process. even when hotels are trying to describe themselves, begin use ai to enhance. there are a lot of cool things that we are experiencing. >> you said you are ready for your own vacation. >> i have traveled a lot, but i would probably go to the italy. i will take anything >> --i will

take anything. >> thank you so much. it details from the latest studies, and with us. this is bloomberg. ♪ when you automate sales tax with avalara, you don't have to worry about things like changing tax rates or filing returns. avalarahhh ahhh

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>> this is bloomberg markets. i want to bring you breaking news out of pakistan. the pakistan party nominating their next prime minister. a rival had dropped out of the race earlier. switching gears, it is time for the wall street be. we will talk about how it is going head-to-head. according to a new study, they have been trying to beat each other out on pricing.

for more, we are joined by john stage. when you look at the data that we are getting, you are seeing compression. it signals that the glory days are coming to an end, doesn't it? >> you can see that in pricing, but another great thing callout is payment in kind being offered in a lot of these direct lending deals. that is something that they have not wrapped their head around yet. they say now that you are going back, we are able to offer payment in kind on a lot of these deals. they are trying and pulling their leverage. >> give us some examples on what is coming to market. it seems you are seeing some

spread compression. >> yes. it is a kkr acquisition. we're seeing one of the lowest pricing spread in the market, as it currently stands. that is a great example of that. it sits right on the periphery, so the private credit out there is saying, we will lower pricing as much as we can and offers small tips and tricks to make us stay as competitive as possible, but it will need to be seeing with more deals out there, who will win out? >> does this create somecern about the quality of credit coming to the surface and

potential erosion of returns the future? if you start losing money on these current deals, what does that mean? >> you see a lot of these, the most important for keeping your investments eighth. you are seeing some of those follow way where we have not seen them in many years. private credit again is saying, let's be competitive even in the lower end of the market, which traditionally has had one to two to be out types of covenant. the long-term potential is, if i do not have a covenant and something goes wrong, the potential risk to that is much larger and greater. >> let's get a quick check of the markets before we let you go.

you're still looking at a down day. small and big cap, inflation is feeling does being. some pain with yields surging more than 14 basis points. this is bloomberg. ♪

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