>> welcome to bloomberg markets. of course today is fed day so happy fed day. policymakers are set to make their decision in two hours with investors not just focused on jay powell but the first wave of big tech earnings. here are where things stand at midday with the s&p 500 down about .4%. you have technology shares and rates while financials are higher. speaking of, the mag seven losing 1.3%.

meta, microsoft and tesla will be reporting at 4:00 p.m. we will break those numbers as a cross. profits are rising faster than the overall market but the rate of growth has slowed down and eased to the slowest pace. that is something to keep in mind. not a whole lot of movement in the bond and currency market and not a lot of people want to get ahead of the fed decision and the press conference at 2:30 p.m. you can see the dollar inching higher, 7% in the for -- in the fourth quarter and down about .5%. let us highlight individual equity movers and bring in isabel for that. >> shares are edging lower and we are seeing in just renewed pressure after yesterday seeing an 8% gain. on monday we saw a 17% drop wiping out $600 of market cap sparked by fears of a chinese start up called deepseek. many wonder if this will

threaten the dominance of ai. but goldman having a selloff in ai related stuff. shocks is just the start of a bear market. we have a lot of earnings later. up next, starbucks is going the opposite way. the shares edging higher around 8%. they reported better-than-expected earnings and this is a sign that the cusp -- that the company lured back customers. that is an improvement from the 7% slot and in china we saw an improvement which is a key market where growth has suffered. last we are looking at trump's company. trump media and technology group is gaining after plans of expanding into financings -- financial services and it will launch. this will develop as a may -- sma's and $250 million that will be kept in custody. back to you. scarlet: thank you for that

overview of individual movers. you mention president trump. speaking of it was a busy day on capitol hill with the senate holding a confirmation hearing for his comments such a secretary nominee. once ago this is what he had to say about tariffs. >> a particular product's price might go up but all of them this is not inflationary. the two top countries india and china have the most tariffs and no inflation. it is a nonsense that tariffs cause inflation. scarlet: for more on the hearing on his economic plans let us bring in enda. the highlights as you just heard, talking about tariffs and inflation and he says that tariffs do not cause inflation and they can create reciprocity. reporting has shown that he is all in on the tariff plan. economically, how does the trump administration prevent tariffs from causing inflation? enda: it was a very hawkish

presentation. the incoming commerce secretary pushed hard back on the idea that tariffs are inflationary and he said it is necessary to protect farmers and ranchers and business but it comes with caution that if duties go up on consumer goods if you move beyond an input material or into. goods then those prices will be priced on the people and main street and it will pressure inflation. the question and the big debate of course is the level of any new tariffs imposed and the breadth of those. if there imposed across the board for goods from china or is it targeted in national security specific areas or other sectors deemed sensitive. he did say in his testimony and made a point between the tariff threats at the moment on mexico and canada which he linked to fentanyl and control of illegal

immigration versus a broader study on the macro need for tariffs when countries have an imbalanced trade deficits. he made a nuanced argument. scarlet: what is interesting is in the first week and a half a lot of people anticipated that he would come into office and impose tariffs right away. he has not seen that in terms of china when president trump has to see that beijing has investigated with a deal that was signed in his first term. does this represent a change in approach? enda: it is too soon to say. on the one hand you had not had week one tariffs. but we had a lot of hawkish signaling and rhetoric that tariffs are coming in one way or another and that we also have those studies that have been put out which will be focused on china with those reports due back on what needs to be done to balance the trade with china. and of course mr. lutnick

himself was quite hawkish in his language. there he direct and he says a very jaundiced view on china. not the kind of language you would expect. that is making clear that i think the trump administration is serious. it goes to the point and the unknown. we do not know the specifics in the levels and all of that is coming. and i think a lot of analysts will say they want movement on tariffs on merchandise goods. scarlet: what country do you think will be the first that the trump administration imposes tariffs? what is the most clean-cut case? enda: the current focus is on mexico and canada. the administration is serious about cracking down on immigration and the fentanyl issue and they have highlighted mexico and canada and set that deadline. resident trump spoke about -- president trump has spoke about the deadline and a lot of said they will be something around coming whether it is tariffs or another warning. that is the first port of call. after that it goes into these

executive orders that came out last week saying that the officials in the trade representative office that they have to go off and look at what is going wrong with u.s. trade and resettle those books. until march they will be more activity and once we get personnel confirmed. scarlet: that is an important point. personnel makes policy. thank you so much for joining us from washington. we are counting you down to the first fed decision of 2025. a pause is expected as j without -- jay powell years up for politics on the agenda. let us ring in the president and founder of macro policy perspectives. fantastic to sit down with you. in terms of the decision, it is expected to be a bit of a nothing burger. will it be folk -- what will you be focused on in terms of the information you might extract from the press conference and

the decision? julia: you are right. they will not cut rates again. they signal that clearly. it will all be about the press conference and the peace strikes. we think he will be open-ended in terms of he will not guide us to a pause or a cut at the march meeting. that he will just keep reiterating data dependence. there is challenges coming down the pipe to potentially both sides of the mandate. and they will have to wait and see how things play out and how that manifests in the macro economy. so, it will be a frustrating press conference, probably. the markets are not expecting much in the way of rate cuts so, in a sense the market is well-positioned for a said that will be probably very --a fed that will be cautious for a wild. scarlet: it is data dependent but also policy dependent.

the bank of canada cut rates. they dropped guidance. in a statement in regard to tariffs, the bank of japan -- canada said that inflation is going to stay close to target. however if tariffs were imposed, the resilience of the economy would be tested. and enda was saying there is a february 1 deadline in place. if the white house moves forward with these tariffs that they are talking about up to 25 percent on canadian and mexican imports, how does the fed bold that in because that will take effect and we will see it before the next policy meeting. julia: that is one of a variety of policies that can affect the macro economy, cutting federal spending could affect the macro economy. definitely a slowdown in immigration which has been quite abundant in terms of producing labor supply and a dynamic man -- dynamic labor market. the fed has to look at all of

these things and keep an eye on all of them. the bank of canada is a good example. they highlighted the dual mandate threat. it can raise prices. i mean ,lutnick is saying it is not inflationary. in the near term it raises the price level and it looks like inflation. for consumers the distinction does not mean that much. that could also hurt demand and the economy and the manufacturing sector. so the bank of canada highlighted that it could do both of these things. the same is true of the united states. scarlet: when we talk about monetary policy and the lag of those decisions. is there a long and variable lag from things like tariffs? julia: no. we have one experience to go on in trump's first administration they impose some tariffs and we did see them. we do a lot of bottoms up

sectoral analysis of inflation. we saw very clearly in the goods that were tariffs we saw their prices rise. it did look like a one-time increase. but one thing we are also noticing is that those goods were also the least likely to see falling prices in the pandemic in the initial phase, so there is definitely, when it comes to tariffs there are not long and variable lags, it tends to come through quickly. as soon as they are imposed they pass through into consumer prices with only lags of a couple of months. so, long and variable lags is a translation a policy to the broader economy. it does not apply to tariffs. scarlet: the fed has a dual mandate not just inflation in managing inflation maximizing employment. one of the policies that the trump administration has is immigration raids.

and reporting illegal immigrants. to that effect, how much of an impact to uc on the labor market and will there be long and variable lags on that or is that more instantaneous? julia: a bit of both. one thing that they have taken already is to shut down the application, the app that allowed people to make appointments for processing at the border and that is shutting down any inflow of new immigrants through that channel and of course there is still the work visa granting channel which is probably going to take a longer time to slow that flow. but i think that we will see a material change in labor market dynamics and environments as the year progresses. it will not be instantaneous but we will see near-term impacts from the reduced flow of immigrants and we hear the

reports of a chilling effect of people not showing up to work for fear of deportation. the numbers is not that huge but if there is a broad-based chilling effect that can affect the broader labor market and activity as well. scarlet: i appreciate you joining us. julia joining us. do not forget our special fed coverage begins with team surveillance at 1:30 p.m. linden club state -- linden club shares -- lending club shares taking a hit. we will speak about concerns from investors next. this is bloomberg. ♪

scarlet: this is bloomberg markets and i am scarlet fu.

on our radar the lending club, there shares following the most since july 2023 after investors were left underwhelmed by the latest earning report. the concern is a forecast for loan origination that did not live up to expectations. joining us is the ceo. thank you for joining us. very quickly do you that this reaction is justified with regards to the guidance on loan originations? scott: of course not. we feel great about the year that we delivered and our outlook. we close the year with double-digit increases and revenue and loan origination volume and the forecast is for those things to accelerate throughout the year. and if you look at our outlook and how we exit that is in line with analyst expectations. i think the disconnect today is about the timeline to get there.

that has most to do with those expectations set at a time when analysts were expecting four rate cuts from the fed. those do provide a tailwind when they manifest. and just like we did last year we can continue to drive operating improvements without said operating cuts and the expectation of four has come down to 1.5 means it will take us time to get there. scarlet: thank you for explaining that disconnect. something that analysts point out are the higher provisions. in terms of credit standards for borrowers, how are you assessing those? is this an environment where you would consider loosening them? what factors are you taking in to make the decisions? scott: to clarify, the provision is not related to credit deterioration. we are delivering the highest returns in our history both to us who hold our own loans as

well to the buyers of our loans. we have had four years straight of dramatic outperformance versus our competitors. our delinquencies are 40 to 50% low the market. it is really what drove the provision increase is the fact that we put more loans on the balance sheet. we added 600 million in the fourth quarter. and you add those you take in a credit provision. and that is the most we have added in a year-and-a-half. that is really what explains the provision. in terms of under what -- underwriting standards. more than a year of real stability but, we remain disciplined on credit. i would not say -- i would say the pace of change and the pressure that we saw post-pandemic when they were adjusting to inflation has really stabilize. but, there are still pockets of pressure that you can see on

consumers and you see that across all asset classes. scarlet: i am curious more broadly how do you gauge the health of the consumer. overall things are stabilizing but do you see particular pain points or signs of stress emerging. if so, where are they showing up? scott: we are not seeing signs of stress. things are stable but they are elevated from where they were pre-pandemic. what you saw really emerging in call it, 2022 and into 2023 was a cost of goods and cost-of-living was rising faster than wages and that is what caused pressure on consumers and that has gone away. when we look ahead, especially given our business, we save people money off of the cost to debt, most notably off of credit card debt. credit card balances are at a record high level and priced at a record high rate.

our consumers are paying 30% to 50% more to service our credit card debt than three years ago. for us, what we do is that we can say they are able to service that debt and we offer them a way to save on it. they are able to lower their rate and payment so we get positive selection. we are really taking good credit worthy customers and saving the money. scarlet: it is customary selection that drives this. i would like to get a sense of your plans going forward. are you planning to expand towards a regulatory environment with a lot of m&a expected? any partnerships or m&a on the horizon that you are considering? scott: we announced last quarter that we acquired the assets of a company called talley, which what they had built was a debt management technology, specifically for credit card debt which allows consumers,

half of all americans credit -- carry credit card debt and half of them do not know the interest rate they are paying and this will allow us to get into debt iq and this allows people to link their credit cards and they can see the interest rate that they are paying, when the payments are due and they can automate the payments, and that will all be available through our mobile app later this year. that is something we are excited about, adding into what is already an award-winning experience on our loan and deposit side. scarlet: we appreciate you joining us. the ceo of lending club in san francisco. coming up, a big week on tech earnings for microsoft, meta and tesla reporting. this is one of the busiest days for the s&p 500 companies. we will give you a preview of the results in a couple of hours. this is bloomberg. ♪

scarlet: this is bloomberg markets. tesla is set to report earnings after the bell and investors will bewaching for any updates on new products and trends on the volumes of vehicles sold with the backdrop of elon musk gaining influence in the trump administration. let us bring in keith who covers tesla. i cannot remember the last time he made headlines because of tesla rather than his other extracurricular activities. keith: it is the truth. it is like the car company part is the sideshow and the politics and ai are the main event for elon now. scarlet: what are we looking for in terms of results? do the actual number of cars sold matter to the stock these days? keith: that is not what analysts say. 90% of the stock is focused on

the ai story and robotaxi story and only 10% is on the traditional car stuff. we have earnings today and we will be interested to see if elon will stick with his growth projections, very aggressive 20% growth projections this year and last year sales were down for the first time in a decade. they will see if new and fresh products are coming. you know, tesla is still in need of a lower-priced model and will that come in the first half of the year? they are many questions that they have for him. scarlet: president trump has reversed the biden mandate on ev's but has not done anything when it comes to ev credits for first-time buyers. how much is that folded into whatever tesla's forecasts include? keith: that is a question for him today during the earnings call. elon has previously said if the

$7,500 tax credit goes away it will hurt the other guys more than tesla. it is a net benefit to tesla. they still control half the ev market in america. the newer players in the ev plant -- ev space are certainly more dependent on government support than tesla is. scarlet: what is the number one comment or number that you will be watching for when the results cross? keith: margins. investors want to see what happened with the margins after tesla did a ton of discounting. that is how they are moving the metal in the old-fashioned car practice. they are lowering prices and putting incentives to get the cars out the door because the model lineup is aging. scarlet: in that way it is much like any other automaker because that is what the big automakers have relied upon. keith, we appreciate it. joining us with the tesla preview. coming up, we will continue with this theme because microsoft is

out with earnings and it has a big focus on its ai efforts and what that means in the wake of the deepseek progress made. this is bloomberg. ♪

dad: hey boss. you okay? son: i said i'm fine. ♪ dad: you can talk to me. son: it's been really, really hard for me.

scarlet: welcome to bloomberg markets. want to give you a quick check on where things stand in markets. a down arrow, but a small down arrow. off .3% for the s&p. volume much lower than the five day average as investors await big tech earnings from the likes of meta, microsoft, and tesla, as well as the fed decision. the treasury market is also in wait and see mode. the dollar, of course, has been surging since the first quarter but has not done a whole lot of

them, 2025. natalia? >> we are watching shares of t-mobile up by 7.5%. at one moment that was the best performing stock in the s&p 500. the company posted better-than-expected revenue and also added more high-speed internet customers than analysts had expected. and outlook was also positive overall. investors call those results pretty solid. we also watching shares of asml. shares are currently up by the most since march 2020. the company posted a solid pipeline of new orders. of course everyone was looking for any commentary around deepseek, but the ceo said this is good news for the industry. on the flipside we do see that the company expects slower path

of sales in china in 2025. finally, of course, meta is one of the key stocks to watch today. we see that results are coming today a little bit later. and we know that everyone will be looking for any commentary around deepseek. you will also be watching capital expenditures, because mark zuckerberg earlier said that capex will increase and microsoft is also among one of the key stocks to watch. the stock is currently down by slightly less than 1%. it is also interesting how trading has the verged since monday and we see that some strategists are seeing more upside in stocks like microsoft after this saga with deepseek. scarlet: thank you so much. we are going to stick with those big tech earnings and bring in caroline hyde. earlier today the norwegian wealth fund talked about why

these are so influential right now. >> any of these large tech companies, it is the same driver. the same geopolitical risk. it is the same world hotspot. if you get correction in one of them you could certainly see very much your portfolio coming down at the same time. because now we are seeing top 10 companies in our indexes accounted for 20% of the market. scarlet: now we bring in caroline hyde for more on microsoft and openai. i know on "bloomberg? " you go into the weeds when it comes to a i and seek and all of that. when it comes down to microsoft it is still very much the sales of azure, the cloud computing business. there has been a growth slowdown, hasn't there? caroline: there has. we are expecting a 32% growth of azure. many questioning the pricing of their offering at the moment.

copilot that they are now having to reframe to the market i rebranding them as -- basically this is agent, some way you are going to be used as a chatbot. is it selling quickly enough? is the price point right? that is under a lot of stress when you have deepseek proving you can build a cheaper model and it be as powerful as openai. is not mean all of the prices have to rush to the bottom? this is the point many analysts saying, eventually this will help openai and therefore microsoft will get cheaper, and therefore there is a clearer is this model, or profitability. but for now they are spending big and we are going to have a lot of questions on that commitment to building out data centers. scarlet: that is what they said before deepseek. are they under pressure to move that higher or lower? what will investors respond to? caroline: everyone wants to hear, if you are going to spend that what is the return on spending?

deepseek does not mean that suddenly we are not going to need inference. you are still going -- going to need gpu's. we were going to need cloud provision because we are going to be using a lot -- ai that much more ubiquitously. it still puts a lot of compute necessities out there. they're going to have to vindicate that this is the still direction of travel in terms of spending. all of this comes at a time where we are seeing more questioning about what deepseek has done, how they have potentially used openai's own data. scarlet: howard lutnick, the nominee for commerce secretary is saying that deepseek stole things. what do we know about this microsoft investigation? how quickly is it likely to show any results? caroline: i'm sure they are setting up more rooms to work out what the implications are. already we have heard from david sacks, who is the ai and crypto czar. he has said there is evidence

showing that ultimately openai's data has been used. the question is of proprietary. we have a key security adviser come on the show a little bit earlier, and he was saying it doesn't always mean there has been ip theft. these sorts of models, the way you barrage them with question upon question to understand how the model works, has been done plenty of times. at the moment as you're's offering allows that. is this ip theft? is this a misuse of these models or do they do it legitimately and we are going to have to start putting more guardrails in place so that seeming bad actors coming from china or other countries are not able to use all of u.s.'s invested ip and easily build on it themselves? many are questioning the way in which deepseek was built more broadly. scarlet: in terms of microsoft or meta, which of these firms sets the tone for the rest of the industry? caroline: both do. you cannot look away from the

fact that it is microsoft, meta, tesla as well tomorrow. all of them have significant market capitalizations. meta will have an implication on advertising spend. also what is microsoft doing about tiktok? does it want to get into digital advertising? i think both will equally dictate the direction of travel when it comes to their overall market capitalizations. they are vying for the top spots at the moment. microsoft is in terms of market cap. scarlet: carol -- caroline hyde, thank you so much. she will be breaking down the results in her program tomorrow. we talked about microsoft, we talked about tesla. more on meta and ai efforts. this is bloomberg. ♪

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scarlet: this is bloomberg markets. and i'm scarlet fu. it is time now for the stock of the hour and we have already discussed tesla and microsoft, so now we turn to meta. the shares are higher, but this mark a seventh-straight day of gains. it is scheduled to report quarterly results right after the bell and this comes days after deepseek caused a bout of volatility in those tech stock names. joining us now is eric sheridan, partner at goldman sachs. eric currently has a buy rating on meta. i mentioned how meta shares are up for a seventh-straight day despite the disruptive news about deepseek. is the market correct in seeing this as good for meta? eric: there is a couple of themes that have been making their way through meta's stock.

first, they already previewed what they would spend in terms of capital expenditures 2025 by saying a range of $60 billion to $65 billion. that is lower than what some investors had feared. there have been some press reports around laying off the bottom 5% of underperformers in the organization and/or possibly reorganizing their reality labs division. those all feedback into what they are investing on operating expenses for 2025. i think there is a couple of debates around meta some of the incremental data points that are idiosyncratic to meta have been positive in the last week. with respect to deepseek because it was built on top of meta's model and open-source models in general i think there could be an interesting theme on the earnings call where mark zuckerberg talks about the advantages of open source relative to some of the closed foundational models. that is going to be an interesting thing to watch for. scarlet: does mark zuckerberg to

convict three lap on today's earning call? -- a victory lap on today's earning call? eric: good for driving costs down longer-term and good for speeding up the time-to-market of the application layer. we have seen this infrastructure built out over that two-plus years since chatgpt exploded onto the scene in november 2022. in our year ahead report in december we highlighted that this was going to be the year that the shift happen from infrastructure to applications. that is going to be the real test for ai. it is how people utilize ai as opposed to being built out on the infrastructure side. scarlet: you mentioned one of the themes zuckerberg will press on is driving costs lower and that that $65 billion of capex is lower than what a lot of people had feared. will zuckerberg bring down that number, or even its expenses,

its planned spending numbers for other items? eric: i can't say with certainty on the capex number. i filed -- find it unlikely that mark would revise down, or the team would revise down the number one week after giving it. i think there is probably a more fulsome conversation about what that number might look like beyond 2025 or is 2025 peak capex number? that is going to be a conversation we have on the earnings call. to your second point, which is interesting, we don't know what they are going to guide for operating expenses. have an estimate of 116 billing of operating expenses in 2025. i have spoken to investors who have numbers as low as 108 billion or as high as north of $125 billion. there is a wide range of expectations. that will be the new data point in addition to what we have heard on capex. scarlet: as caroline hyde was

just telling us, meta provides a read through to other tech companies that are reliant on advertising. are there comparisons to be made, given that meta is working in a universe where it has its llama ai offering that is open-source and some of those companies are not even in the same league? eric: it was a good point. i think the readthrough to digital advertising is going to bk. not to dismiss the ai theme. i think the theme is important for the medium to longer term and how there is momentum that those around that. but away from that the q4 reporting period, our ad revenues going to be at or above the high end of the range they gave? we think they will be at the high end of that range. the environment and consumer spending was quite strong. in q4, especially in the digital economy. not only meta, but the readthrough could be to a strong, stable digital

advertising environment tonight, which, to your question, does have a readthrough to names as far as alphabet, all the way to pinterest and snap as well. scarlet: fantastic. really appreciate you making time to talk with us. eric sheridan from goldman sachs on meta. we are counting you down to the fed decision at 2:00 p.m., and its guidance and news conference at 2:30 p.m. we will be speaking with former kansas city fed president thomas hoenig. earlier bloomberg spoke with esther george about what she expects. take a listen. >> the weight is always on thinking about the inflation. because that is the most direct influence that the central bank has on its mandate. and having seen this inflationary process slow down, we are now in a fifth year of inflation running all above the fed's target. i would be in a position myself to say we can wait.

we should wait. the economy is performing well. ♪

scarlet: this is bloomberg markets. i'm scarlet fu. in just over an hour we are going to get the fed decision. 30 minutes after that we will be hearing from jay powell in his news conference. right now on the ground in washington is our very own mike key. we are not expecting any change in rates, so the fed is going to pause for the first time in this cycle. but everyone wants to hear what jay powell has to say about inflation, and in particular any kind response to the trump policies that were announced. do you think he is going to play ball? mike: no. [laughter] that is a simple way of putting it. the fed will say they don't know enough about what is going to happen to make any firm conclusions about how the economy is going to evolve, but

jay powell will obviously say they will watch the data as it comes in and make their decision when it comes time to make a decision. powell has shown he does not really want to engage with the president. now, it is always possible that something might come up that he wants to respond to, and we do know that president trump is holding an event at 2:00 p.m., the same time the decision comes out, and some reporter may ask him about the chair and we may end up asking the chair about what the president said. if you were asking me i would say the chairman of the federal reserve will avoid taking on the president today. scarlet: of course, this is the first meeting of 2025, so you have a new slate of voting members. goolsby, collins, and schmidt are in and parkin, bostic, and hemming are out. are we going to see less unanimity because this is a broader range of views that may change the outcome? mike: don't think so.

at least this meeting. as we get further into the year and becomes a closer question as to whether you are going to cut or not, at this point there is really no one arguing that they should cut at this time. given the uncertainties about the administration and its policies it is hard to make a case for that. i don't think you will see it today. obviously beth hammett dissented the last time because she thought they should stay put. it would take somebody who really wants to cut and the rest of the fed doesn't to get them to have any kind of dissent. scarlet: fantastic. michael mckee will be helping lead our coverage of the fed's decision at 2:00 p.m.. you will want to keep it here on bloomberg for him and team surveillance. today's meeting march the first since president trump took office. again. and it marks a new tension between the white house and the fed. just last week president trump gave his opinion on rates. pres. trump: i think i know interest rates much better than

they do and i think i know it certainly much better than the one who is primarily in charge of making that decision. but i am guided by them very much, if i disagree i will let it be known. scarlet: for more on this i'm pleased to welcome thomas hoenig. tom is a distinguished fellow with mercatus center as well. it is good to speak with you. as you just heard from the president he has been nothing but consistent about his preference for lower rates. in what way does this create problems for jay powell and the fomc? thomas: i don't think it creates new problems for him. the fed has had presidents wanting lower rates since it was founded, practically. this is not all that unusual. trump is more public about his disagreements with the fomc and chair powell and he will make that clear. i don't really think of this as something that is all that new,

except for the pressure he might put on them. i don't know that he will do it right away. i think everyone understands that right now the economy is strong. it is strong going into 2025, coming out in 2024. i think that will continue. and right now, although everyone says they want lower interest rates, interest rates are not all that high. the fed funds rate they like to quote is 4.25%. inflation is 2.5% or better. that is not particularly restrictive by any means. they have lowered it 100 basis points. and why would they lower it when they could actually increase the longer end of the yield curve, as it has over the last three or four months? i remember 10 years, or around hundred basis points, while -- excuse me, up about 100 basis points. there is not a lot.

the other thing about it is, the fomc and the rest of the world, things are very uncertain. so, we will have to wait and see how those things evolve before you really get into discussions. scarlet: thank you for clarifying that. that historical context is critical. from where you said it doesn't seem like you see much of a risk president trump might demote jay powell and just leave him on the board. thomas: number one, i don't know that he can. that would be a legal argument that would have to be carried on, and powell said he is not willing just to step down. that would delay it. powell leaves in a little over a year from may, so why get into that? as long as they are not raising interest rates and interest rates are where they are now, and not threatening the economy? scarlet: good point. when you are at the federal you served on the infotech oversight

committee. what sorts of questions should -- should the central right -- central bank be asking about deepseek, that has made ai models cheaper and more efficient than we have seen already and has done so even with these export restrictions? thomas: the main thing there is for the fed and for others to think about, what will be the impact on productivity? productivity is the key to real wealth increases. it is the key to having your economy grow without inflation. they will be looking at that, i would assume. from my point of view, just early discussions on this suggest to me that investments in technology around a i will continue and maybe even accelerate, because the potential -- if you can do more with less and the chinese have shown you a way, why -- why not do that? that would increase productivity and give some assurances to the fed that they could see the economy continue to grow without inflation, and that might

actually ease the pressure for them as they have to face the question of when to lower interest rates, if they are going to. scarlet: i have to ask you, you are based in kansas city and joining us from kansas city. you looking for a repeat from the chiefs? thomas: thank you for asking. i most certainly am. if anyone will do it, they will. it is going to be a good game, but i think the chiefs will come through. scarlet: i was hoping you would spend some time in philadelphia and you were rooting for the other team but it sounds like you are all in on the chiefs and patrick mahomes. scarlet: tom homan a joining us from kansas city. don't forget, again, our coverage begins at 1:30 p.m. new york time with team surveillance and michael mckee. in the meantime we pointed into the markets, which have sagged lower with the major equity indexes in the red. the s&p losing .4%, as is the nasdaq.

have a slate of big tech earnings from tesla to microsoft to meta after the closing bell at 4:00 p.m. one yields moving higher, but at this point little change. from new york, this is bloomberg. ♪

>> from the world of politics to the world of business, this is "balance of power."

live from washington, d.c. joe: and we count down to the fed. welcome to the fastest show in politics. a little faster than usual today as we balance our focus from capitol hill with the federal reserve, where policymakers are preparing to announce a decision on interest rates. i'm joe mathieu alongside kailey leinz. we have a lot to cover here as we lead our way up to special coverage to the federal reserve decision just about a half hour away. kailey: that for decision comes at 2:00 p.m. eastern time, and guess who is going to be counter programming? that would be president of the united states donald trump, who plans to sign the lake and riley act at that time. i wonder if a reporter is going to sneak a question about him on his thoughts on the fed's decision, which is expected to be a hold on rates, not a hike and not a cut, even though donald trump prefer rates go down. kailey: