>> lots of uncertainty, it is the risk off trade. >> right now, it is business as usual, but may be a bird on the shoulder of uncertainty. >> now it is cross asset. >> you'll get an environment attractive for investment. >> there are areas where you can look at the valuations and say that this is completely reasonable, but there is a more nimbleness and you have to be watching things more closely. >> this is bloomberg surveillance with jonathan ferro, lisa abramowicz, and annmarie hordern. jon: good morning, good morning. bloomberg surveillance starts right now. coming into thursday on a two day winning streak on the s&p 500 looking to make it day three. on the s&p posited by .1% p the nasdaq 100 up by a similar amount.

the russell 2000 up by a quarter of 1%. the focus on the data and the earnings, eight: 30 eastern we get jobless claims and later after the closing bell we hear from amazon. amazon earnings after the close. before we get there, music to bramo's ears. me and of the president of the united states are focused on the 10-year treasury yield. lisa: i told you this will be the most important thing of this entire year. scott bessent, you heard me. i'm with you. i think we all agree that will be the most important metric. the interesting aspect is this takes the pressure off the fed to cut rates in the near term. he did go after the fed on some level saying, they were the ones who messed up in the first place by cutting 50 basis points and that led the 10-year to rise, but it highlights how they are concerned about inflation and borrowing costs and how that will inform the decisions more than any political interference. jon: this is an argument we

heard before on wall street that the reduction of interest rates from september through the end of the year, 100 basis points, contributed to the high yields on the back end because there was a concern that the fed will allow this economy to run to hot. lisa: he leaned into this idea. on the flipside, how much does this affect his decision or not to link than the duration of some of the deficit, given we had the announcement yesterday of the treasury refunding. it didn't include lengthening the duration like scott bessent said he previously would. how much will that be a limiting feature to some of their plans because they are very cognizant of what we are, their options and the 10-year treasury yield. jon: how will they manage the average maturity at the treasury? the second point is an important one. will they be constrained by the bond market as they start to develop how big they want these tax cut plans to be? annmarie: trump 2.0 everyone says will mean higher yields

because you have a blooming reconciliation bill.on top of that, the fact that whether or not it is pervasive or one-time hit, many economists will tell you that tariffs are inflationary. lisa: when you sit back, it puts these two ideas against each other. the idea of more nationalist, putting tariffs on policies that are typically not as good for growth with the progrowth aspects. you think about the 10-year treasury yield's, and if that is their metrics, do they like that tariffs are being treated as disinflationary and may be a damper on growth, even the uncertainty? at what point is the damper on growth a problem even though you are getting lower yields on the long end of that some of these officials want? jon: we all have follow-up questions but you get round two of scott bessent here on bloomberg sitting down with our reporter. look for that later this afternoon. that will be must watch. the s&p 500 just about positive. we will catch up with northern

trust with stocks on a two day winning streak, ed mills with best and focus on 10-year treasury yield's, and scott devitt previewing amazon. a third straight day of gains as traders look ahead to a busy stretch of earnings. expecting volatility ahead, writing, political uncertainty is likely to remain high during the first few months of the administration. we think investor should maintain a flexible investment strategy that can adapt to trade policies. you have been busy. how busy have you been? >> a little hectic. jon: have you had to become super tactical? >> the reverse, jon. over the weekend we published on capital market presumptions focusing on our 10 year outlook for asset classes. the situation for equities looks decent. it is quite a contrast that

sunday night we were focused so much on what it means for the next day, while we are focusing our 10 year view. yeah, we have to be super vigilant to what is happening every other day now in terms of are we on or are we not. any type of positioning you have, one morning you look great because you were defense on sunday night, and in the afternoon when the tariff issues are no longer relevant, you are positioning -- jon: and it could change in five minutes' time. anwiti: what that means is that in the near term, while all of these negotiations are underway we expect volatility to be high. if you look at the fundamentals of the economy, we are expecting pretty decent economic growth this year, around 2.5% or so. inflation is the big question mark.

keep focusing on that, and company earnings so far coming out quite fantastic. 9% to 10%. for the full year, expected to be even more than that. the rest is noise. we won't have clarity on that for a while. that may appear sometime in the middle of the year. if at that point we know what that looks like, because there are several outcome loads for these policies, then reassess, be flexible. flexible also win the market overreacts to some of the near term noise. reposition yourself if there are opportunities at that time. lisa: people talk about what is going on in washington, d.c. noise. it is confusing right now. it is basically how many times can we say how many different ways can we say i have no clue and don't make me comment on it.

even in the negative round to earnings, we saw some of the capex plans, particularly from alphabet, and they were punished even though it was a capacity issue that constrained sales of cloud computing offerings. i'm wondering if the narrative in the market of shifting away from some of the big tech drivers and capex that really went into cloud computing, ai adoption, and broadening out, if you believe in that narrative having staying power or if you think the flipping and flopping is noise? anwiti: that is a great point. we believe in the broadening of earnings this year, and we saw some of that actually in the third quarter of last year also. if you look back for the full year, it was still ai concentration in tech, that kind of market behavior where everything else was participating but not quite to the extent that the tech sector was. this year was likely to be noisy and volatile, even before the

tariff news there was the question mark around the deepseek news. our contention is, aside from flexibility, another thing to do in the portfolios is be diversified. go away from just the tech focus names and focus on companies with really great balance sheets, good earnings potential. companies that have so far been ignored by the market, but are solid companies. companies that have quantitatively in a low volatility score and a quality score. lisa: is the u.s. the focus or does diversification mean outside the u.s.? in january everyone was saying how low is the bar in europe and then europe gained 8%. how much do you lean into the u.s. story? anwiti: we still say buy

american. mainly because of the structure of the earnings component and all of these economies. the earnings story for the u.s. remains very strong. the buyback story remains very strong. there are these structural issues and the rest of the world where, as opposed to the buyback story that we see in the u.s., we actually see dilution elsewhere in the market and that keeps us u.s. focused. annmarie: right now all of the bad news is being priced in, the uncertainty about tariffs, and some of the good news when it comes to the tax cuts, but we don't have tax cuts yet. we do have an extra 10% put on chinese goods. if you get no tax cuts at the end of the year do you want to be invested solely in the united states? anwiti: absolutely. i think the consumer's super strong, the companies are doing very well, so the tax cut is not

the only driver. it is that they will go up, that remains the driving factor in the market. we aren't waiting for additional cuts, but the threat of increased corporate taxes is off the table. jon: we have heat come out of the u.s. story in the last couple of days. prices paid a little lower, the overall headline read came in lower. job openings falling back a little bit. nothing to get too concerned about. i won't say that the federal reserve needs to cut interest rates before the next meeting, but there is nothing there to suggest at the moment based on the data that we've seen more recently that they need to hike anytime soon. lisa: which is why you saw a huge rally into duration yesterday and why you're seeing the rally in the bottom are globally feeding into the broadening out story and the idea that this is a positive disinflation, not something coming in -- jon: did you see the headline from mckenzie? being global is a choice.

frankly, it is more difficult now to make that choice. i know this is difficult and may become increasingly so. speaking directly about china. lisa: maybe they are going to pull out of china? this is what we were talking about. how long before company signal that the uncertainty is too difficult? it was a money-losing business for them so they don't have that much on the line, but the head of mckenzie wanted to be a global company. is the idea of being a global company losing flair because of some of the liabilities associated with being in places where policies are changing so quickly? annmarie: is it worth the risk? you look at the long-term, is it worth the risk of being in china? the last time that we heard from greer on capitol hill he talked about decoupling the united states from china. jon: this works both ways if you are shein and temu. you are thinking about having a presence in the united states based on the headlines. the tension between the u.s. and china and what it ultimately

means for your investments. equity futures are just about positive 5.1% on the s&p. let's crossover for more. yahaira: scott bessent says that in order to lower borrowing costs of the administration's focus is on bringing down 10 year treasury yields, not the fed's benchmark rate. in an interview last night, bessent said that trump is not calling for the fed to lower rates. we will have an interview with secretary bessent today at 1:00 p.m. eastern. google is the latest company announcing changes to the diversity hiring plans according to an internal memo. it said it is reviewing its programs and with no longer have "aspirational goals tied to representation." it joins amazon and meta's retreat from d.e.i. initiatives which have been rejected from president trump's administration. tesla sales in germany plummeted 59% last month. only 1700 cars were registered.

it hasn't seen those level since july of 2021. musk's intervention in germany's election was likely a factor with polls taken showing that he was viewed unfavorably and his interventions were unwelcome. jon: more in 30 minutes. thank you to anwiti as well. trump focused on bond yields and not the fed. sec. bessent: he wants lower rates. he's not calling for the fed to lower rates. he and i are focused on the 10 year treasury. what is the yield of that? jon: ed mills joins us next on the program. live from new york city, good morning. ♪

jon: bond yields a little higher by two basis points on the 10-year, 4.4 four.

jobless claims later this morning, the estimate in our survey 2.13. the number drops at a: 30 eastern. trump is focused on bond yields and not the fed. sec. bessent: he wants lower rates. he isn't calling on the fed to lower rates if we get the tax bill done, if we can energy down. then rates will take care of themselves and the dollar will take care of itself. he and i are focused on the 10-year treasury. what is the yield of that? i believe the bond market is recognizing, as you and i talked about, energy prices will be lower and we can have noninflationary growth. jon: treasury secretary scott bessent making clear that president trump will not pressure the federal reserve to lower interest rates, saying that the administration is focused on bringing down the 10-year treasury yield.joining us

i wonder what consequences that might have, if any, for the tax cut talks over the next few months? ed: there is a lot to talk about. the first thought i have is as soon as the treasury secretary says donald trump isn't focused on the fed lowering rates, we are almost near guaranteed getting a headline from donald trump saying that the fed needs to lower the front end of the rates. i think when i hear these comments it is going to be difficult to do as much of the tax cuts as republicans want to do. another thing in that interview, treasury secretary bessent said that they should do a score that would allow republicans to make the trump tax cut's permanent, extending current baseline. if we are going to see a four to $5 trillion plus increase in the debt and deficit over the next 10 years, that is what the bond market has been looking for. i guess the thing that i would highlight is in trump 1.0,

everyone was focused on the equity market and that was the barometer of trump's success. increasingly, clients and raymond james are asking, is the bond market the new barometer? last night treasury secretary bessent kind of made that official. we are going to be watching the 10 year see how successful trump policies will be. annmarie: is that because the bond market has a seat at the table when it comes to what you are discussing? the huge tax bill and if they can go as far as they want to go? ed: talking to folks in and around the trump administration, one thing they want to highlight is tax cuts are only one part of the story. they want to talk about the deregulatory agenda, they want to talk about doge, the amount of money that will be collected from all of the tariffs going and place. if you want to get what the treasury secretary is describing, the market has to be prepared that there will be other sources of tax revenue coming in, and other cuts to the

federal government spending. so, the aggressiveness that we are seeing from elon musk and doge is part and partial given political cover for the hill to go a little further or a lot further. annmarie: senators will sit down with trump this weekend talking about this two-path bill. i caught up with congressman jason smith who wants his one, big beautiful bill, but that seems to be collapsing in real time. what are next steps for republicans in congress? ed: getting a budget. you can't start budget reconciliation process. you have nothing to reconcile until you get a budget. this is where republicans have as slim as possible of a majority. if you lose one vote you don't get this done. donald trump will have a conversation with house

republicans and see if you can get them to pass something to start the process. they are still fighting over process. until you figure out the process you can't get a bill. i think we are going to get the tax bill done. it could be permanent. they could add tax cuts to this if they use the score that they are talking about. but until there is leadership from the white house to instruct them on what to do, we don't know what we get from the hill until that point. lisa: i love how we started the conversation with how important the 10 year is and how this might be the ultimate check on the market. i thought the photograph we showed set it up perfectly where you have donald trump in the middle, scott bessent on one side -- a bond representative, and then howard lutnick on the other side in some ways the stock and growth representative, trying to get other things across. who has the louder voice come the louder influence of the man in the middle, donald trump, when there are a lot of competing egos and wishes? it isn't clear how constrained

to some of those people are going to be by saying the 10 year yield. ed: i guess my flippant answer would be the last person who spoke to him. that is what we have seen countless times. he has once again instilled what we call a team of rivals. we see this elsewhere, too. on trade and tariffs, there is a huge match between team econ, scott bessent's world, versus team tariff, that is let nick and jamieson greer. he is having his hearing today for u.s. trade representative, peter navarro. what i have been instructed to do when i'm listening to all of these competing voices is to find areas of commonality. that is going to be the likely policy. one of the things that i think that the market has been missing is the most dovish view coming out of that team of rivals on tariffs is only starting at 2.5% of the universal tariff, and

getting to 10% to 20%. if that is the dovish view, i want to know what the hawkish view is. lisa: how do you advise clients and companies who want to understand what their footprint should look like? want to understand where they can expand in the world? are you telling them to hold off and that they frankly won't know what the hawkish view is and how high it could go? ed: i'm not telling them to hold off, but i am telling them to expect volatility. i was at a conference at our headquarters, talking about how volatility is back. you have to kind of not reacted to everything to get some of the big conversation right. there are a number of things out of this administration that could be viewed as market positive. there are other things that could be viewed as market negative. the way that they implement that, the timing and the degree, are going to be the big conversations of 2025. don't stay paralyzed because if

we stay paralyzed you miss out on a lot of opportunity. i have been doing this job for a while and i can always tell you the risk. that has not been the right strategy before, and i don't think it is the right strategy now. jon: we have all been saying over the past several months that we wanted to know what would come first. we found out the focus was on trade pretty quickly. i wonder how quickly things could change again when we start to see what is going to happen with the tax package? when do we get a better idea of the contours of that? weeks, months, how long? ed: some idea in the next few weeks. you have to pass the budget first. republicans, if we can get a budget in the february-march time period, people get optimistic on what can get done. then i want to see what score they are using. if they use a score that says extend out current policy which is what the treasury secretary is expecting to say, that is where we have the conversation

about tax cuts being permanent. if we are in march and april talking about permanent tax cuts as a high probability event, that is market positive from where i sit. it may have an impact on the 10 year that the treasury secretary doesn't want and that might be the binding constraint, but i expect we will have moments of clarity followed by everything falling apart before it ultimately gets done. one thing that i say about d.c. is that things appear impossible right up until the moment they are inevitable. i think it is inevitable this year we will get something done on tax cuts. jon: brilliant. looking forward to being on the journey with you. ed mills on the path ahead and the next four years. i remember a quote, formerly of j.p. morgan, making the case that the biggest challenge for the incoming treasury secretary, now scott bessent, would not be enacting change, it would be managing the volatility and the market reaction that may undermine those changes. when you think about treasury,

you said yesterday that the complaints about what janet yellen did with the activist treasury instruments at the front end of the curve, not my own words. what we see from them? a reluctance to turnout the debt. based on comments from scott bessent, i would love to know if there is reluctance to turnout the debt or do they want to make a change? lisa: they didn't want to make a change that quickly so clearly actions speak louder than words. we have to study it and make sure that we do it in a prudent way. we are just in the door, we've only had 19 days. why are you pushing us? the reality is, it is clearly their focus and that will be the restraining factor. jon: pushing out the supply further along the curve, logically, won't help. lisa: which is why i'm skeptical of that happening in the near term. if inflation comes down and there is some sort of disinflationary shock, and maybe that is the bad angel that comes

out and since we are putting on 40% tariffs, if you get a tanking 10-year maybe they turnout the debt in that moment. jon: looking ahead to numbers from amazon, that comes later. welcome to the program, equity futures on the s&p are just about positive by .1% in the bond market. bond yields are higher. good morning, mr. president. the 10 year, 4.44. it is your world, they are coming around. lisa: i feel so seen. jon: this is bloomberg. ♪

jonathan: equities on the s&p 500 just about positive, cooking for a three-day winning streak. the nasdaq -5.10%. not a great day more broadly for most of yesterday session. but for amazon, look out for cloud revenue. we will talk about that more in a moment. the 2, 10, and 30 years, the big takeaway, taking out just a little bit of heat from the economic story. things ok but not as hot based on yesterday. job openings number before that, bond yields higher by two basis points, the 10-year, 4.4362. sonali: yesterday you told me

the most important data point would be ism services, and it was, but it was not necessarily even the headline number that came in softer grip the prices paid came in weaker, softer than expected. it speaks to the idea that inflation is not going to happen and increasingly, you have taken the risk of a possible rate hike off the table and increased risks of rate hikes. jonathan: i'm not sure that, required that much foresight. ism might be more important in adp, but i like it. i will accept the compliment. let's focus on sterling, 30 minutes until the bank of england rate decision and governor bailey might have to do something that no bank would like to do, down the -- downgrade the outlook for growth and upgrade the outlook for inflation. sterling at 1.2427. lisa: three weeks ago you saw the highest 10 year gilt yields

going back to 19 98 and people speculated they would not have room to cut the rates with that higher inflation outlook and lower growth outlook. everyone still expected them to cut rates and who gave them the past? ism data showed prices were lower and there is a feeling that maybe we are not on this inflationary spiral that gives them the possibility to cut rates. jonathan: sterling a bit weaker. let's get your news this morning, scott bessent said the administration is focused on bringing down 10 year yields on the president does not calling for the fed to lower rates. annmarie: this is a change of two, how many times have we seen trump 1.0 campaigning, coming into the white house, the president saying he would like lower interest rates. he is a real estate guy and things he knows better than jay powell, so i'm wondering how long this reversal, in terms of

where they are happy with your interest rates are, is going to last. lisa: at the same time, bob came in yesterday and said, people think we control mortgages. people say, it's so expensive to buy a home, but we don't control that. we control the front-end, at best, so this is a real estate developer listening to people who understands a be the fed does not hold the keys to the ring he cares about. we will see if it sticks. jonathan: mortgage rates went up, but this is what bessent is going to get, that that reduction is going to contributing to high-yield of the longer and i contributed to higher mortgage rates, which for people not listening, that might sound counterintuitive that is what the argument has made. lisa: if people believe they're still a bit of heat in the economy, they ratchet up expectations of long-term growth and inflation, this is the balancing act that scott bessent

needs to manage and the reason why may be we saw the president, and say he thinks the fed did the right thing by holding, which surprised everybody. annmarie: how difficult is this going to be because higher tax cuts, and what ed mills was talking about when scott bessent said to larry kudlow that he would like them to be permanent, how much more you have to tap the debt market and how much more will bond markets pushback on a higher deficit? jonathan: treasury yields higher by four point quarte -- 4.40 four. sources telling us that bloomberg that a plan potentially puts freezing the conflict in providing ukraine with security guarantees. annmarie: i was part of this reporting with 15, this month is going to be critical, and you can see a major shift in tone, president zelenskyy sat down for an interview this week saying he would like to end the "hot stage of the war," and is willing to speak to putin. after general kellogg unveils

his plan to allies, he's also going to be, the first time as his envoy, going to ukraine. at the same time, zelenskyy will also be making a trip to the gulf, definitely going to qatar and the united arab emirate's. trump is forcing their hand to get to the negotiating table. jonathan: they are going after so many things. it was so sleepy the final few years of the biden administration, the contrast is absolutely stark, how much they are getting done and how quickly it is happening the past few weeks. annmarie: everything, everywhere, all at once. i spoke to sources yesterday, i was at the white house, everything they talked about and were preparing after trump won the election, they wanted to make sure alder people were in place to get these things done. it is jarring because, not to be rude, but biden was watching

paint dry, he would drag his feet for every decision, where trump just comes out, even if it is an idea floating around the rest wing, he says it out loud -- west wing, he says it out loud. jonathan: the profit, followed by $2 billion or more this year, and the company says the forecast does not factor in potential tariffs from the trump ministrations, down by more than 6%. it could get a lot worse if we see those tariffs. lisa: they could see billions and billions in profit destruction and you can feel this delicate dance that a lot of executives are doing. on one hand, they would like to warn about the consequences of tariffs, but they don't want to get in the bed graces for the -- of the president, so there's an all of branch saying we know he would like a strong, robust u.s. auto manufacturing sector. you can feel the tension as they realize how much carnage could

hit the profitability. jonathan: let's turn to tech, amazon reporting after the closing bell, the stock was rated outperformed, expecting another year of gains for the company. scott joins us now for more. welcome. we have heard from microsoft, what have they told us on what we could hear from amazon later? scott: the biggest comes from the web services business, where both underperformed. there are some idiosyncratic effects and the terms alphabet did not have the capacity which is the reason it must by 200 basis points, so it will be interesting to see whether amazon takes control of the narrative with web services in terms of being a sure gamer and then they are ai positive relative to the position it has had the last 12, 18 months to

azure, so that is the data point from the otherwise alphabet that is quite strong and that is a positive data point for amazon's business, as well. lisa: there has been a shift when it comes to capital expenditures tied to cloud computing and in-house some of the companies will expand. google was penalized significantly by $75 billion price point for how much do plan to spend. do you think amazon can shift the narrative on capital expenditures at a time where it is the fact supply can actually keep up with demand? scott: meta, the stock, responded positively to high levels of capex. and alphabet has been on its back foot and having to spend to keep up in this transition and so effectively diluting the

margin profile. i think amazon sits somewhere in between. there is a necessity to sit in the cloud business to retrofit it for selling ai services, but a lot of the amazon spend drives incremental, high levels of growth. i think the market response to the extent it was under shock with, but instead of $87 billion to 90, 95, that will be digested so long as the fundamentals are as strong as we think they are. lisa: how much is the focus going to shift the cost cutting and efficiencies? andy jassy has talked about cutting middle-management, replaced with machine learning tools to reduce costs. how much are you looking for that type of announcement today? scott: we had 22 disciplines across the board for these

companies out of the pandemic, and we have gone back into investment mode, but it is nonhuman capital investment and we will continue to hear that from companies, including becoming more efficient with human capital and those being redeployed into capital infrastructure, so i don't expect meaningful leverage from amazon in terms of that, but they are benefiting from a shift in their business in terms of where the web services business is so big now and growing so much faster that they have a natural lift head of operating profits over time, so amazon over the next five years, we expect profits to grow at over 20%, which is well worth them. annmarie: morgan stanley says amazon's exposure to tariffs is higher than other e-commerce openings, what are you expect in on that front when it comes to the trade war between china and the u.s.? scott: i tried to wait and see,

so if someone can explain to me what they are going to be, we can put them in the model, but amazon is as well positioned, roughly better, and anyone can deal with it. places like china could be affected, but i do think without having all information, it is hard to answer, but i think if it is a negative for retail overall, it is a negative for amazon and they will weather the storm better than any retailer, if not all. annmarie: morgan stanley grossly talked about 25% of the products sold by amazon come from china, accounting for a little less than half of all product sold on amazon. what is the wait and see? 10% was added to the already the tariffs that exist on china. scott: you would either be digested, which is a

possibility. we don't know what the outcome is going to be, and you also have the possibility of resource and products for other locations, and nobody is more able than amazon to help merchants do that. it is a difficult question to answer at this point in time and if you look at their peers in terms of large retailers, there is a lot for trump, as well, and amazon is well-positioned to defend against the change in terms of the cross structure of its merchants. jonathan: scott devitt looking ahead to amazon earnings, and the cloud business, what happens with e-commerce and the cloud business, things we are putting next google and microsoft, not impressive, particularly for the likes of alphabet. on the trade story for

e-commerce, it is this helping them or hurting them, given what has happened? lisa: great question, how much are they able to redirect? we saw they were charged some 30% increases to ship, and they were worried about logistical delays. no one knows how to process some of these tariffs, so if there is a lack of knowledge, can you exploit that i jacking up prices? how do you take advantage at a time when you see amazon increasingly taking on the share. jonathan: we will get amazon earnings later this. let's get you an update with your bloomberg green. yahaira: president trump posted on true social minutes ago about his plans for the gaza strip. from writing the gaza strip would be turned over to the u.s. by israel at the conclusion of fighting. the palestinian people will be settled and safer and more beautiful communities, adding no

u.s. soldiers would be needed for the operation. meanwhile, honeywell shares are citing 4.5% in the premarket after announcing plans to split into three publicly separately traded companies. honeywell has been under pressure from elliott investment management, which called for the split to boost shareholder value. process is expected to be completed by the second half of 2026. nissan shares traded higher in japan after the announced plans to seek a new partner as it prepares to and talks with honda. the new ally would ideally be from the u.s. tech sector. nissan's board is also pushing for a restructuring plan and the goal is to come up with a deeper revamp by february 13. jonathan: more about 30 minutes time. next on the program, counting down to payrolls. >> it is very hard to know what is happening with inflation

until you get a little more clarity on all of these uncertainties. there is a lien in their toward cutting. jonathan: joining us, jonathan pingle. this is bloomberg. ♪

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jonathan: live from new york city, good morning. later today, earnings from amazon after the closing bell, 8:30 eastern, jobless claims. equity futures on the s&p 500 unchanged following two days of gains. in the bond market, higher by a single basis point, the 10-year, 4.43. we count you down to payrolls.

>> it is very hard to know what is happening with growth employment, inflation, until you get a little more clarity on all the uncertainty, and i don't see any signs. i think we recalibrate a place that is more sensible given where the economy sits right now. if you look, there is a lien toward cutting. jonathan: advice towards easing, and there is no price to hike either. let me pause for a second, that was a fed official that seemingly did not want to say anything about the future across a 6, 7 minute interview. lisa: in fairness, how can they? right now they don't have the clarity anybody has because nobody does. everybody comes on and says we have no clue. there was an interesting point he made, what uses forward guidance in a time like this? is it still a tool with ford guidances? we have no clue.

jonathan: a lot of people don't, and we have seen that from corporate america, people are struggling pingle to offer guidance and if they do pingle, investors are struggling to believe it. we get payrolls this week, this is the outlook from jonathan, we estimate nonfarm payrolls rose by 240 k in january with private payrolls increasing 195,000. jonathan joins us now. good to see you. weirdest a number come from because 240 is pretty big following a big number in december? jonathan: if you ask any economist with the hardest month to forecast payrolls is, it is january. the post holiday layoffs take about two point 8 billion workers off payrolls and then adjusted upwards by 3 million workers to get that headline out of print. that seasonal adjustment is by definition a huge source. on top of it, this is the month where you get the historical seasonals revised, so it is

going into this with one eye blind. however, the last few january's, we have seen a low layoff environment, and low layoffs have helped boost january payoff -- january payroll numbers. lisa: we talked about how much they will change the child figures, how many jobs are we going to take off and how not good was last year? how not amazing was last year heading into this year at a time when some people were thinking we were on the verge of overheating? jonathan: it depends on whether you are talking about payrolls for the household estimates. it looks like the pluming or a benchmark we got back in august, down 818,000 jobs, looking at the data, it is closer to $700,000 adjustment that we will see tomorrow, but if you look at the household survey, it is revised by 2.7 million for population, 1.8 for actual job

growth, but they are meeting in the middle and we are starting with a clearer picture of what was actually going on last year. jonathan: you have a unique way of talking about the payrolls numbers and i will tell you why. you don't start off by saying, economy good, number x or y, you talk about it as if it is a random number generator and this is what i think it will spit out. when you say things like i expected to stay 240, i don't hear from you that the economy is pretty decent, i just hear that this is what goes into the random number generator and this is what i think the number will be. that is unique, what do you think the economy is doing away from that to 40? -- that 240? jonathan: i think the economy has been doing well post election, but will be slowing down. we will see this pre-election certainty. december looked really good and in some ways is a business or

firm, you did not know what industries are going to benefit and which are going to fail, and you really got a great sense our great clarity on nike new hiring here, not here, but we take this will boost the lines. going forward, the actual trump uncertainty will weigh on how much these gains could have going forward. lisa: what are you looking for to measure with how they are affecting the market? does it have to do with hiring plans more broadly or with immigration and labor? jonathan: a lot of it is a growth effect. if you look at the changes, the sentiment boost points to the short-term, and i have to work at something that happened last month, payrolls last month, a forward-looking, however, it is the best picture we have in the moment, and as you go forward, you care little bit more about how this aggregate demand really attract these things? how much does slowing

immigration affect the labor force there? how will amend externally and how will tariffs be in certain ways and how we figure that out, as well? annmarie: you are seeing a loosening of the labor market and at the same time, we will see less immigration come through. potentially remain status quo, is that possible? jonathan: this january print is not necessarily a great print, the skew on the seasonals does not mean everything will keep going on very well. this is more of the skis we have seen the past couple of years, and it is an assessment that will hopefully happen again this year. it is tempered by cold weather, which i had an estimate list and others, and the wildfires, but going forward, i think you will see the payroll impact estimate from slowing immigration, but it will be harder to figure out how that happens to potential unemployment. annmarie: is this a window this

year for the fed to cut? jonathan: if you're looking at the economy in a broadway and looking at payrolls in a broadway. we have seen almost two thirds of the hiring of two sectors, health-care social systems, and it is an economy that is hiring and only two sectors by what they mean and maximum employment ? that is worth mentioning, especially as we get slowing into me and that becomes the question. jonathan: you think there is more weakness than meets the eye on the surface? jonathan: yeah, and i think it creates more of a more brutal labor market rather than everything going well, and you see that here. jonathan: this is what citi said, as well, that there is a lack of rights when it comes to job gains is inconsistent with the housing labor market. lisa: the idea that quits and hires are staying at low levels and a stagnant level, the idea of sector specific hiring does not give people flexibility if

they get laid off a sector. jonathan: that is problematic, let's put it that way. good to see you, i appreciate it. that was a compliment, by the way, unique way of talking about the. labor market numbers lisa: are going to downgrade at almost one million jobs from last year. this highlights the lack of specificity. jonathan: which is to reiterate, jonathan was the most accurate payroll forecaster last year. jonathan pingle. next, jack caffrey of jpmorgan chase. henrietta treyz and we catch up with gene seroka. he had a monster 20 24. that conversation is around the corner. the second hour of "surveillance" up next. ♪

>> we think the u.s. economy is really strong, and relative to the rest of the world. >> we are still seeing strong trends when it comes to labor economic activity. >> we still believe in the u.s. exceptionalism story on growth fundamentals. >> if you are a u.s. banker, you have to model growth down, inflation up. >> this is "bloomberg surveillance" with jonathan ferro, lisa abramowicz, and annmarie hordern. jonathan: the second hour of "bloomberg surveillance" starts now with equity unchanged on the s&p 500, the nasdaq down by a little more than .10%.

later today, he focused on the nasdaq with earnings from amazon. look out for that 8:30 eastern with jobless claims just around the corner. coming up, we catch up with jack caffrey of j.p. morgan asset management on the latest earnings, we speak to henrietta treyz as the trump administration bows to extend tax cuts, and gene seroka up later of the port of los angeles on the risk for global trade area before we get there, we need to talk about a bank of england, if they drop rates by 20 basis points from 475 -- 4.75 to 4.50, the breakdown was different. lisa: two people to dissent. here the scene right now on how they pushed his board in terms of tariff uncertainty and how far they are impacted by their bond market. jonathan: cable is down by one

full percentage point, weaker pound against the u.s. dollar, and the bank of england, let's talk about the decision to drop interest rates 25 basis points but the outlook, that changed to outlook, how problematic is that for central banker? >> it is a problem for central bankers, but let me start with this, kathryn man, formally of the committee, voting for a half-point cut, along with another, and if i'm seeing the headlines correctly, this is a real swing. we were expecting an 8-1 split, but to have these two voting for a half-point cut shows the worries about growth of the economy. the bank of england is supposed to be focused on inflation, but

you mentioned the forecast. it is not a good look for the reeds when the u.k. government's top priority is meant to be economic growth. and they are looking at a weaker outlook for growth. they are looking at inflation stain higher for longer essentially. it is a picture of sad-inflation. lisa: it might be a bit of a relief to the bank of england. it is not necessarily giving people the sense that you will have those hard left resurgence in inflation going forward. how much are you expecting to hear about whether the tariff backdrop is going to weigh on this or if this is simply just because of the budget and the situation, stagnating employment and a real issue with growth? lizzy: of course, the difficulty

is they just don't know what is going to happen in terms of tariffs globally as it specifically for the u.k. for now, they are in donald trump's good books, but they will be an impact on the u.k. economy. our economists at bloombergtechtv economics say if it is just avoiding direct tariffs on the u.k., it will hit growth. if you have direct tariffs on the u.k., it will hit inflation and that would put the boe in a bind because it would be harder to rescue the economy. andrew bailey talks about the free trade, and i'm sure that is what he will say in the press conference, but the difficulty is these forecasts may already be too rosy because they cannot integrate policy that has not yet been set by donald trump. jonathan: i would love to get your thoughts on something, i used to cover the central bank, i have not lived there for several years, but looking at this on the surface, this is a

central bank with inflation target of 2%. they are forecasting inflation to drop below that to 1.9% in the first quarter of 2028, the first quarter of 2028, which raises an obvious question, why are they doing this, cutting interest rates, and why are some people voting to cut them by 50 basis points and prioritizing growth over inflation? do they believe if they don't protect growth, something bad will happen? today acknowledge core growth will stay out of it, which the court thinking and how they explain that in a news conference? lizzy: that is exactly what was going through my mind, and this is why i talk about what their mandate is, they are focused on inflation, supposedly, but look at the problems in the labor market. it has been deteriorating rapidly since the budget, and that is what they are showing in the forecast, the worries about

unemployment to come, clearly, they feel like they need to help out with growth because the chancellor's measures on the supply side are not set today can affect for decades perhaps to,. jonathan: appreciate the update. the bank of england cutting basis points -- rates by 25 basis points. it was interesting to see two individuals look to cut interest rates by 50 basis points at a time when they had to upgrade the outlook, lived the outlook for inflation. that is a difficult one to explain later. lisa: you highlighted the tension, especially because this is not a doormat of the central bank. you think 10 year yields are lower on the heels of this, so no one expects this to cause a surgeons in inflation -- a surge in inflation but there's a theory that it is harder to get back jobs that are lost as a rules of interest rates that are

-- as a result of interest rates that are too high then bring down inflation for a time. the currency is a little bit in the roof, and this will be a confusing picture. jonathan: i wonder if there is a message for ecb, as well. if there people signaling they would like to cut basis points, why are they doing the same thing? lisa: since when do german central bankers take advice from the bank of england? there is a question on whether this is a dual mandate. jonathan: sterling right now is down by one full percentage point against the u.s. dollar, 1.2374. amazon reported after the closing bell, jack caffrey of j.p. morgan writing, interesting times are more of a challenge for markets. there are stream -- extreme versions, to the point where it can be paralyzing to many. jack joins us for more. we are starting to see some of that from officials, officials

who do not know what to do in this moment. jack: you are left with having to respond and react to a series of executive orders. i think we are at 40 plus at this point in time, and so it is rather hard to figure out how do you allocate? i think it is hard how you sometimes allocate capital when i can change my mind quickly and it is more difficult when i'm going to spend 50, $100 million, and building a data center, can i rebuild in southern california based on where labor markets might be? i think we might rewind a bit to 2019, 2018, when you gotta tax cut that was supposed to stimulate growth and that a trade war, which had the company's question when and where i should be spending my money and that creates job growth and ultimately helps keep

the merry-go-round spinning. lisa: big tech has confidence to keep spinning, they are spending and drove some people have not really liked it, mentioning that their biggest liability is not spending enough, so why isn't it getting rewarded? you have certainty, hallelujah. jack: there is a disconnect between what tech companies see and what they would like to see. if we go back to the late 1990's, the idea came out that you would like to try to capture as much as quickly as possible, and that i think leads to an executive's come back to the idea, if i build it, they will come and they will get rewarded. more recently, you are seeing pushback from a couple of the big technology companies who have said we will spend and we are confident demand will be there, trust us. it is the last line that has

given pause and had knockout effects for all those other people who may be supplying not just the building, and then with deepseek, indicating that there may be cheaper ways to achieve the same goals. lisa: there is uncertainty on the policy front and people seem to think there is uncertainty on the structural story around artificial intelligence because that narrative has been flipping and flopping. do you think that some of the sales of utilities, etc., around what we saw following deepseek, was that overblown or was that the beginning of sort of rightsizing in people's expectations? jack: i think we have to stage the challenge we are experiencing because what we continue to hear is that actually getting the gpu's remains challenging, but when you are looking to build up the data center, you have to build

the whole building, secure the electricity, that is a big, chunky spend, and it is much more incremental, so you can actually have some dialing down the spending intensity if the demand is there, but when you sit back and think i need to come up with x hundred thousand square feet of space, i need to have it attached to a grid with power, i have to commit that -- commit to that, that is a bigger check you have to write up front before you get to see the demand unfold, and with all the excitement around gpu's and the intensity of getting them, i have to say they are easier to rollout and more measured units rather than a building. annmarie: if all of that is going to be built in america, are those the sectors you would like to be exposed to? jack: the building is built in america and the chip built in taiwan, a different issue. annmarie: but there are a lot of grains from the chips and

science acts coming to the u.s. that we have not seen put to fruition. jack: up until last monday when they said no more grant money. annmarie: but donald trump is talking about $600 billion of this ai, there's a lot of excitement around the space. jack: there is massive enthusiasm and i think that is why we had tech in a strong position, but certainly investors have expressed some skepticism and you can see that in valuations and how stocks are trading at where we see rotation. and your guest before i joined was talking about where hiring has been in health care and hospitality. u.s. economy, 65% consumption. and it continues to turn. i would say as much as we live for employment jobs friday, realistically, it is

unemployment thursday that is the more telling issue with respect to will that continue to turn? so we have seen those initial jobless claims and it speaks to the u.s. economy and actually we are big traders on the dollar basis but in terms of the percentage, that is not our cup of tea. jonathan: 8:30 for jobless claims, and our estimate is in the low 200s. are you playing the rotation? what are you doing right now? jack: i'm going to take some people at their word. i think health care has gotten interesting. and in the s and p, going back for people who don't recall this is being earned and experienced, and i do think when you look through, we have a demographic issue which means the u.s. is creating health care to last several years. there is bifurcation in

valuations. if you touch gop once, we still love you. if you have questions or on the pipeline, you are trading at eight or nine times earnings which is to say no expectations of growth in the foreseeable future, but coming back to companies that are tied to more stable policies like medicare, or you continue to say we will continue to protect social security for the old, which is earned in some sense, i think where you are not asked to pay demanding valuations, you wind up staying away from tariffs and trade and all of your labor force is domestic. i think there are opportunities there, and financials. i can talk about government spending and corporate spending that will likely be paralyzed that several months the reality is it continues to spike higher and kind of interesting yesterday to see the suggestion that fixed income people are

looking not just at the levels but with their compensation is within yields and so i think that fear or that episodic fear is good for trading activity and financials, and it probably will also get a letter to the regulatory cuts. jonathan: jack, good to see you. thank you. jack caffrey of j.p. morgan asset management. as get you an update with you bloomberg green. -- bloomberg brief. yahaira: marco rubio will attend the g20 summit this month, citing south africa's attempts to promote sustainability, adding strain to u.s.-south africa relations, which have been tense due to south africa's close ties in china and the refusal to condemn russia's invasion of ukraine. meanwhile, forward shares are falling in the premarket. the automaker warned the prophet could fall by two point billion

-- $2 billion or more, blaming the weakness on falling vehicle prices and on top of that, jim farley told wennberg that president trump's threatened tariffs could cost the industry billions of dollars. and shares of qualcomm are falling 4.3% in the premarket, the world's biggest seller of smartphone processors expect the overall smartphone market to be flat or increased in the low single digits in 2025. analysts noted that results for the first quarter were otherwise positive. jonathan: more from yahaira in about 30 minutes. next on the program, the trump agenda. >> if we do not get the bill done, and as i said in my senate hearing, this is passed-failed for our side of the aisle, and we will have the largest tax hike in history. jonathan: that conversation next with henrietta treyz. live from new york this morning,

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jonathan: stocks positive by 0.05%, bond yields higher by two basis points for 43.62 -- for 4.4362. under surveillance, the trump agenda. >> this is passed-failed for our side of dial, and we will have the largest tax hike in history, and that will be on the people on our side who do not try to move this forward. tariffs are a means to an end to ensure economic security in the u.s..

jonathan: president trump set to meet with gop lawmakers, coming after senate republicans broke with the house over the president's budget strategy. henrietta treyz writing that budget resolution will contain deficit authorizations, so the real test will be in the text of the budget resolution that the committee marks up next week. henrietta joins us for more. walk us through the process. why is it so important? henrietta: the process is everything, all eyes should be on the senate budget committee. he will move forward with one smallville associated with immigration and the energy component, and that will be the first bill that president trump passes in the first half of 20 25. it will take all year to write the tax bill and it will also have to go through the budget process and that is the first step for any legislation that republicans would like to pass without democratic votes this year, and it will be hard-fought and take the next 12 months. annmarie: i would like to talk

about tariffs that politically republicans would like to use to offset. scott bessent talked to larry kudlow about this is a means to an end, but i talked to house ways and means and they both talked about the revenue service as a new place to be able to collect the tariffs to offset these tax cuts. which one is it? henrietta: you cannot have a declining amount of tariff revenue and rising number of revenue components to pay for the tax bill. it will be a minimum of $5 trillion. if you try to factor in $1 trillion, you must implement the tariffs and you have to have them escalate to accommodate the manufacturing supply ships, retaliation that we knew is coming from other nations, so when it comes to lawmakers factoring in tariffs, i think there's a small basket shop that they can do and be legislation that will score in their tax bill. the exemption may even be

stripping china of its status which is a 40% prospect in my opinion, but those are the two that can pass. for the rest of it, they are talking $50 billion in bailouts because the trade war will be so aggressive, so you have to pick one and not have it both ways. annmarie: we saw the biggest bailout of trump 1.0 go to the farmers because of the retaliatory effects of china. something else scott bessent said, the goal is to be made permanent, the tax cuts, and the republican congress do that? henrietta: no, i don't think so. they will have to negotiate with democrats at the end of the year and it is only 30% odds prospect and here is why, when you talk about a $5 trillion bill, which does not factor in the whole taxes on social security components that president trump continues to tout, you don't have the votes for the magnitude of deficit reduction or offsets to cover that cost. the easiest way out of that is

to look at the duration of the bill. that is why tax cuts expire at the end of the year. 2017, they had $1.5 trillion deficit authorization to work with and that meant individual tax rates would expire. that is what we are walking into this time around. lisa: we talked about what can get past, and yet what we have seen from republicans on both sides is they are not willing to push back against donald trump's agenda in almost any way. are we overestimating how much pushback there will be in very potentially underestimating how easy it will be to pass some sort of budget bill at a time when there seems to be quite a bit of unity? henrietta: i think that is an incredible point but i reached the opposite conclusion. the reason all these congregational nominees are sailing through is because of the legislative wreck heading our way. what we are seeing in terms of

them stepping aside for the omb director who is supportive of challenging the impoundment act and other things that members of key committees don't like is because it is about to get rocky from here. when you hear their treasury secretary say i would like to use current policy baseline, that's fine. you can say you would like to use it but it is not permitted under senate legislation and rules, and they will have to confront the hard reality in a couple of weeks time, especially when we get to the tax bill, so you can want it whichever way you are hoping for and you can look at the policy and state tax cuts pay for themselves, but reality will hate you like a ton of bricks when you get in front of the united states senate and you have to meet the cost of the bill, and that negative reality that is going to be very immediate as opposed to working through court cases and other components will be immediate, and i think that is something lawmakers know and are aware of,

and the trump administration is about to find out. annmarie: are you basically saying that these republican congress members are allowing nominees to go through because they would like to have the presidency or to adjust the budget negotiations as things get ugly? henrietta: absolutely. i think it makes perfect sense. things are about to get incredibly rocky and you are seeing the future party divide between house republicans and senate republicans right now, whether it is jason smith of ways and means, and senate finance, they have two competing agendas, mostly because jason smith is concerned he cannot get a tax bill through his chamber without the sweetener of order security and immigration and military spend, and he thinks they cannot get anything done for 12 months and they would like to use a baseline which means they don't have votes in the house, so that future party that has been around for 20 years, if not more, is about to come to the service, we are just not seeing that they are acting on executive actions, not just and that will change.

jonathan: it is only week three, and we have to repeat that daily. henrietta treyz, thank you. the 10 year yield would like a word, as well. down 40 basis points. 40 basis points from the highs of january. lisa: reigniting some of the disinflation. i would like to say it is a beautiful thing, the 10-year. jonathan:. focused on the 10 year yields. next, the outlook on pharmaceuticals with robert kennedy junior on track to become health and human services secretary. ♪

jonathan: equity futures on the s&p positive by cluster .1%. moving the other way on the nasdaq we are down by .1%. no drama so far this thursday morning. we are two hours until the opening bell. let's say good morning to manus cranny. manus: when it comes to honeywell it is time to break up the game. we knew this was possibly coming. the activist investors took a five dollars stake in this company. they are getting what they want, which is split up to try to boost the valuation. you have this stock trading on 21.5 times earnings per share this year. what did we get? aerospace and materials. that is the breakup. a big part of the beast is automation, worth $18 billion. then you get the actual numbers

and guidance and they are missing on multiple fronts. they are missing in terms of the foreword guidance. that is almost a validation of the narrative from elliott. either way, breaking up is never easy to do. just take a look at ge and the valuation that came through there. ford, again, guidance is everything. price cuts on the cars is going to cost more money to develop a up. the lincoln navigator and the ford expedition. profits are going to drop by about $2 billion. tariffs, the ceo was with bloomberg yesterday, billions of dollars added to costs, that is the risk. and jobs here in the united states. he wants a reasoned discussion around tariffs and keeping some of those tax credits for producing in the usa. qualcomm, you have had big tech, now it is about the chips. 75% of their revenue comes from

handsets, from smartphones. that business actually had a pretty hot additional quarter. three quarters in a row it has been running hot, but it is about the slowing trajectory of that smartphone growth. that is what this is. being flat but increasing single digits. we talked about the lack of upgrade cycle in the apple story, but here is a qualification of some of the headwinds. perhaps the consumer, and they exclude the renegotiation they are doing with huawei. it is a feast in terms of that whole smartphone discussion. jonathan: thank you. some stocks to watch and a little bit of relationship counseling along the way. amazon set to report earnings after the closing bell. investors focusing on the cloud business and sales for the holiday shopping season. cloud growth will be key after disappointments from the likes of alphabet and microsoft. lisa: they are really the big player, with aws capturing a big part of the share. how much are they seeing the

demand outstripping supply? i'm trying to make this story relevant, but i'm looking at what kind of efficiencies they are going to be talking about, because andy jassy put out a 1400 word in a festive talking about cutting middle-management with some of the efficiencies through machine learning. do we see some of those layoffs to justify the payment for some of the capital expenditures? that, i think, is going to be an increasing theme. annmarie: i'm interested in trade. morgan stanley is saying amazon could be one of the biggest e-commerce giants hit. this de minimis exemption means the biggest competitors from china are the ones that are going to be hurt the most when it comes to making sure those tariffs are on products that are less than $800. jonathan: net benefit or net negative? i want to turn to google, but not about the earnings. google is the latest tech company to drop diversity goals. as were told the company will no longer have aspirational goals

tied to representation. google going on to save the -- and it is committed to treating a workplace where all employees can succeed. lisa: some of these were put into place in 2020 following the black lives matter protests. they looked to hire a larger proportion of their staff as being people of color, people of different ethnic backgrounds. this comes as they and others come under a lot of pressure from states like oklahoma, who are suing them to try to say they are not being constitutional. expect to see more in this space. really difficult dance, especially for tech companies that have been a bastion of some of these policies. annmarie: it has come as trump has made within the federal government and companies to what he calls root out "illegal d.e.i.." google is not the first want to do this. we have seen this from a number of companies, saying, we are going to focus on meritocracy and take that language out. jonathan: the equity side of

things, there seems to be a refocusing. they have legal issues as well, but there has certainly been a refocus in corporate america to go back to the foundations of what this country was all about. that has got to be the shift we are seeing from corporate america at the moment. lisa: the way a lot of diversity programs were put into place was through benchmarks, hitting certain benchmarks. it seems as if the shift -- and this started with affirmative with respect to college admissions -- has been retrenched by the supreme court. you are symmetrical out to corporate america. jonathan: elsewhere on the government, more than 40,000 federal workers taking the trip and ministrations's offer to leave their positions with pay through september. an official at the office of personnel management telling bloomberg the number is expected to surge ahead of today's deadline. annmarie: they also want clarity to make sure they will get paid for those months that were promised and potentially you

could see the numbers go up. 40,000 people sounds like a lot. it is below what their target is, so they do want to wrap that up before it ends, because they want to hit those targets. it is a huge part of the trump administration's doge effort to make the government smaller. lisa: on april 30, his 100 day mark -- it is april 30, right? annmarie: i think so. jonathan: putting you in the spotlight there. lisa: i count the calendar days, because i wanted to take a look at just how much has been changed in the federal government, because we have heard all of this in terms of efficiency, and terms of cutting personnel, in terms of eliminating entire departments. i want to understand how it shakes out and what actually gets through. jonathan: the usa debate right now absolutely fascinating. disappointing to see washington do what washington always does, come tribal. we can have a conversation about

soft power and the need for soft power and the influence we are seeing emerging from china pure you talked about latin america recently. have talked about africa for a long time, the influence china has there. but at the same time when republicans demonstrate the amount of waste that is coming from there, some of the initiatives where taxpayer money has been going, you need to be able to be open minded. parked the tribal politics and acknowledge that maybe x, y, and z, is not a good use of taxpayers' money. maybe we can be open-minded about that. at the same time perhaps we can have a conversation about the need for soft power. but at the moment the politicians are talking past each other. this idea they are going to fight, fight against what? what are they fighting against? lisa: the problem right now is when nuance leaves the room how much gets squandered at the same time, on the waste side of things with programs that may not be necessary, and on the need to be a counterweight to

china in peru, in argentina, going in there and making a real big presence to gain some footholds in some other the precious metals, etc.? jonathan: which is something secretary rubio is trying to do, but in a different way. annmarie: he's going to basically take over usaid. i think there are some republicans who say it is a ton of waste out there, we need to look into that. but there are others behind the scenes may be saying, there are projects we want to make sure we are protecting, especially those that are very hawkish when it comes to places like china. jonathan: some headlines over that -- on that front over the past few weeks. robert f. kennedy, jr. is set to face a full senate vote to become the health secretary. geoff meacham of citi writing, the executive orders over the past few days have shaken investors and we acknowledge moving rfk's nomination is

likely to introduce further volatility. jeff, welcome to the program. you know far more about this than we do, so if he is confirmed what kind of control does he have that would influence outcomes for some of the companies that you cover? geoff: good morning and thanks for having me. i would same, general we learned in the committee hearing for rfk those policies. you say pre-election is different than how you govern. things like vaccines, i think the policies there, maybe a little more controversial, but i would not expect inflation reduction act, the discounting mechanism for that, to be dramatically negative beyond current expectations. i think the stocks -- and you saw farmer rally a little bit given the fact we may have had a bottom here with respect to sentiment and risk of potential policy changes. lisa: we have been talking

extensively about the dueling priorities of this administration on one hand, the regulation on the other hand. this idea of resetting expectations of what is allowed. this is highlighted in the health care sector, you have new drugs coming out because of different machine learning systems. with a government that wants to deregulate, you think rfk junior wants to lean into passing things quickly or is probably going to hang up some of the new developments? gene: i think it is more likely to be the latter, just because you will have new administrations, new leadership at d.c., at hhs, including obviously rfkj. and fda. under this scenario what you get -- and the list goes back to historical trends -- is a little bit of a right-sizing, new middle-management, new decisions. i think your first point is

exactly right. even trump knows that the u.s. biofarma industry by far is one of the most innovative in the u.s. no one wants to stop or slow that down, but i think you will see may be a natural kind of slowdown. call it three to six months. beyond that i think we will be off to the races. lisa: there is an effort to reduce costs. this comes at a time when one of the biggest debates in your industry is whether medicare is going to cover glp-1 drugs. do you see this administration as more amenable or less to that type of conversation? geoff: i think it is probably more amenable to discounting glp-1's, but the main issue is, we know this going back to noble's select trial, that they glp-1 drugs are not just about weight loss. they really reduce risk of cardiovascular death, of heart attack of stroke, and also

reduce blood pressure. they have a totality of benefit beyond just obesity and diabetes. i think just that fact alone would make most administrators in d.c. want to expand the use of these drugs, all the navy at a measured place -- measured pace. at the end of the day this is a profound class that is going to have activity and a bunch of indications across the biofarma space. annmarie: i also want to talk about debate happening about the inflation reduction act, which allows medicare to negotiate prices for prescription drugs. do you see this as a headwind for the rest of the year, and which pharmaceuticals could benefit or not benefit from this? geoff: good question. the inflation reduction act, we already have a direct mechanism for direct negotiation between cms and drug companies. that was last year. as a terms out -- turns out, the

level of discounting in 2026 with the first class of drugs was not that bad. but 2027 we now know the next 15 drugs, but it is still the old school negotiation, old-school meeting policy as of a year ago. the only new element to this is whether trump and rfkj want a more aggressive negotiation. i don't know the benchmark here. most favored nation pricing, to highest price across the g20, or lowest price across the g20, either way if you have a really aggressive mechanism for discounting i think you will stifle innovation and i think trump sees that, and maybe that is because a lot of leadership from former prior to the inauguration went down to mar-a-lago and had a discussion and sort of made, you know, the administration more realistic in terms of how they really want to view the pharma industry. you don't want to stem the tide

of innovation we are seeing across the space. jonathan: appreciate your input. geoff meacham of citigroup. come on soon and we will talk about this more. equity futures right now positive by .1%. let's get you an update on stories elsewhere. here is you yahaira jacquez. >> u.s. allies expect the trump administration to present and long-awaited plan to end russia's war in ukraine at the munich security conference next week. it is set to be presented by keith kellogg and includes potentially freezing the conflict and leaving territory occupied by russian forces in limbo while providing ukraine security guarantees. meanwhile, softbank is in talks to acquire ampyra computing. talks are in advanced stages and may value the chipmaker at about 6.5 billion dollars. this is the latest deal in a wave of chip companies looking

to capitalize on the ai spending boom. a transaction may be announced in the coming weeks. the bank of england cut its key interest rate to 4.5% which struck a hawkish tone. the central bank signaling that only two more reductions are needed to bring inflation to its 2% target. seven of the nine members voted for the quarter-point cut, but 21 and a half-point reduction. jonathan: thank you. up next, navigating trade uncertainty. >> the tariff environment is obviously evolving here on a daily basis. how would this work to the system that we really try to help the policymakers understand? jonathan: the conversation continues next. we will catch up with gene seroka of the port of los angeles. look out for that conversation in just a moment. ♪ ♪

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jonathan: equity futures on the s&p bouncing back. we are positive by more than .1%. under surveillance this morning, navigating trade uncertainty. >> the trade environment is evolving on a daily basis. tariffs on canadian or mexican oil may send some of that oil to other countries. the venezuelan oil will be ever more important. it is, how would this work to the system that we really try to help the policymakers understand. jonathan: here's the latest. the flow of global trade uncertainty has clarity on donald trump's tariffs. gene seroka writing, stronger economy, consumer spending, and frontloading of cargo head of central tariffs are helping to drive volume. jean joins us for more. you had a big 2024.

let's start there. could you tell us how much of that was about a good economy versus frontloading ahead of this mess? >> gene: as you know not one variable drives the port, but the length of that stretch has been tremendous. in the summertime, during campaign season we started to hear from importers, just in case we will see how the november elections go and start to bring in more cargo. that turned out to be true. even our january numbers of cargo leaving asia before lunar new year, probably the strongest on record. jonathan: can you compare 2024 to 2021 and your ability to deal with that much volume? what has changed at the port? gene: i think we got a lot smarter. we worked closely with stakeholders. last year we moved more cargo than at any other point in time, including those covid years, and not one ship was backed up. it is more communication across shipping lines, to terminals,

truckers, railroads, as well as being able to see the chart -- the cargo ahead of time. the port optimizer now sees that cargo 40 days before it lands in los angeles, giving us time to plan much better. lisa: was there a tell in where these cargo ships were from loaded from? gene: china, lisa, absolutely. during the campaign there was talk about not only canada and mexico, but china. at one point it was $3 trillion worth of american imports that were at risk of having tariffs levied against them. you start to see more and more folks hedge, but china makes up 45% of our portfolio at the port of los angeles. that was the biggest and most noticeable attraction to pulling that cargo forward. lisa: can you give us a sense of how much it went up during those months and how elevated imports to the u.s. from china have increased in the past six months given some of the expectation of tariffs? gene: we had our second-busiest

year in 2024 in the back half of the year was exceptionally strong because we did not see a lowell from the traditional peak season of summer goods that come in and of the year end holiday spirit november, december, and now january in excess of 900,000 continue units, testable time. annmarie: now there is an extra 10% tariff. what you expecting? gene: in the second half of the year we will see a dip in cargo. and it will be cyclical. but with all of that product here and the price points better than they would be with the additional tariffs levied, probably just a little trickling down overall. probably 10% less than last year at that time. annmarie: the president is talking about how europe is going to be next. he did put tariffs on things like french winds, italian cheeses. do you gain this out for the rest of the year? gene: obviously a lot of people are talking about prices, both wholesale and retail what impact -- what impact that would have.

our folks going to increase their prices knowing that the next landing of cargo is going to be elevated and try to get ahead of that? a little closer to home i look at the jobs associated with the cargo. if our cargo starts dipping down for every container we bring in, it means one job. look at the truck community, the dockworkers, etc.. again, cyclical and may be short, but we still look at that. and equally as important as we are planning right now the recovery in pacific palisades and all to dena. 14,000 homes were burned. we have to get lumber and cement and workers in to help rebuild those communities, so those are the pieces i'm watching right now. jonathan: how difficult is that rebuild ever going to be? you are the middle of it. gene: it's going to be super tough. i'm pleased with the federal response, the state folks on the ground and mayor bass, as well as our county supervisors led by catherine barker, but these are

entrenched communities that now have to be cleaned up my families have to evaluate, can they rebuild it? do they want to? but the all-out effort of that state and local response has been good. now that private sector has to come and keep the pace going. jonathan: some of those people will not go back. will bill is asian is something your business has benefited greatly from. what we have seen is a lot of people get left behind. we are seeing from politicians is quite rightly in some cases a disappointment. want to understand from your perspective where you see the world going. how are things changing? what is the post-globalization will look like from your vantage point? gene: a couple of pieces. 90% of trade moves on water. that is important for us. the cargo gets to every congressional district in the nation. if that cargo starts to move, sourcing changes. we have to be nimble enough to follow that cargo and chase it. the anticipatory of where it is

going to be coming from so we can set up. the speed component for the port of los angeles has been our go to market play and it has got to continue. even with mexico's manufacturing rising we are playing strongly in the michaela door areas. jonathan: what is the relationship between what goes through the panama canal and what could go to you? gene: interestingly enough we saw that over the past year with the elongated dockworkers negotiation. we saw about a 3% or 4% market share up to coming our way. i think there is a lot more opportunity there. jonathan: have you kept? have you held onto it? gene: so far. now, it is early days. we are doing everything we can to keep all of that cargo. jonathan: the politics in that part of the world pretty interesting as well. gene seroka of the port of los angeles on global trade, lisa, in a post-globalization world. lisa: it was quite the opposite at the end of last year as

people were concerned about tariffs. the more that threat is on the horizon the more people import to get ahead of it, so you can just imagine the sort of pushing it down the road and constant frontloading that might continue. annmarie: this is what zero hedge was talking about. they were saying this is perpetual stimulus. if you think the tariffs are coming you just to spend and bulk up and backfill to get in on a better price. jonathan: some of those companies that did that got caught -- got caught wrongfooted. member target? lisa: this year, let's see. jonathan: coming up, reid hoffman, sonia meskin, and terry weisman. your third arrow -- our of "bloomberg surveillance" just around the corner. ♪ ♪

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>> lots of uncertainty. it is the risk-off trade. >> right now it is business as usual, it may be a burden on the shoulder of uncertainty. >> the volatility is cross-asset. >> you are going to get an environment that is attractive for investment. >> there are areas where you can

look at the valuation and go, this is reasonable. but it is nimbleness and you have to be watching things closely. this is "bloomberg surveillance." with jonathan ferro, lisa abramowicz, and annmarie hordern. jonathan: the third hour of "bloomberg surveillance" starts now. in the nasdaq we look like this. just about negative by not even .1%. on the russell, positive by .3%. in 30 minutes it is all about the economic data. jobless claims ahead of payrolls tomorrow. the estimate, to 13,000. -- 213,000. after the close we hear from amazon. the focus of this administration not in the stock, but on fixed income. lisa: let's talk about the 10 year treasury yield for the rest of the year, because that is what scott bessent is looking at him and that is the correct thing to be looking at.

people have been saying that in this term of the administration it will be the bond market that offers the biggest check at a time when inflation is coming off of a higher boiling point and you have a real question about just how much the u.s. can in its deficit. will this be the constraining feature to some of the pro-growth measures we have not seen rolled out at a time when we already have seen a lot of tariff talk? annmarie: it's going to be a long year, then, with lisa every day saying how the 10-year yield is the most important thing, and now she has got us into thanks for that. what i will say is, tax cuts are going to mean higher deficits, which means you need higher yields to finance them. in an interview with larry kudlow scott bessent was talking about the fact that he wants to make the tax cuts permanent. this is going to be expensive. let's not even discuss if they have the votes for that. jonathan: non-inflationary growth is hard to achieve. the previous administration took advantage, benefited from mass illegal immigration. that is essentially what it was.

huge amounts of undocumented workers coming into this country. a big boost to the supply side of the labor market. that allowed them to deliver noninflationary growth toward the end of the administration. in a second term for present chum -- president trump, to achieve this by not going down the same road dated, but by going down the energy path, is an intriguing one. makes sense on the surface of things. rates should fall. i do you get energy prices down? how will they boost supply? lisa: we had mike worth of sarah gash of chevron on yesterday. there is a lot of talk. has there been anything on the ground to increase the production? not necessarily. efficiency is becoming the tool to offset a lot of the extra expenditures we are seeing. does that the to a real slowdown in the labor market at a time where some people are saying we are already on a softening path? annmarie: there is also

inconsistencies with this idea to get energy partners -- energy prices down. what matters more, foreign security or energy prices? you are talking about tariffs on iran, pushing russia to force them to the table by trying to snap some of those tankers off the global market. there is a lot of inconsistencies which might mean you could see energy prices higher even though they want to drill. jonathan: it is an interesting moment for the american economy and the american bond market, just for lisa. you will hear more from scott bessent later. the treasury secretary sitting down with one of our reporters in washington, d.c. look out for that on bloomberg tv and bloomberg radio. coming up this hour we will talk -- we will catch up with darrell cronk of wells fargo, reid hoffman of greylock, and sonia meskin of ubs. looking ahead to payrolls. we begin with stocks looking for a third state -- straight day of gains.

darrell cronk with optimism ahead, writing this. we expect stock prices to march higher by year end. this should broaden to more cyclically-oriented areas. good to see. a bit of heat coming out of the american story. ism services, job openings. we will get claims later. is that a good thing? darrell: i think it is a good thing. you want that economic growth. walk into this year thinking the economy would run hotter than most of our friends up and down wall street, right? we were a good half a point above economic growth. thought rates would be higher. we thought inflation would be meaningfully higher. for almost a full point ahead of everyone else on year-end cpi for 2025 we think earnings will deliver. you are already seeing in the fourth quarter we are on a run rate of about 5% revenue growth and just over 10% earnings growth. 5% revenue growth is the real element, i think. because you can drive that down in operating leverage through

the margins and straight to the bottom line. if you can maintain that revenue growth and get decent nominal growth, let's call it 2.5% gdp growth with we are going to say 3.5% inflation, our year-end target is 3.3%, that is 6% nominal. lisa: if you thought the economy was running hot last year is some of the uncertainty coming from policy that hampers corporate spending? is that a feature, not a bug? to help with the disinflation of a process where otherwise some of these pro-growth policies can be somewhat inflationary? darrell: i guess the way we thought about it, lisa is when the dust settles the positive policy impacts need to outweigh the negatives, right? you have both ends of it. have tariffs and immigration you can: negative and you can call deregulation and tax cuts positive. having got to the latter, yet? -- yet, right?

we are early days, tariffs, control of the border, all of that stuff. the market is weathering that quite well. we are sitting here in a tight band, the look at the stock market, the bond market, remember that when the fed first started cutting rates in september of last year the 10 year was 370. it is 445 today. all of that is term premium, because the long end of the dish of the curve is an inflation premium. almost 55 basis points, so that is term premium, which is just a function of the uncertainty around the policy. lisa: if you get some of that term premium, how much is that part of your call for the broadening out? how important is that to see the rotation out of some of the magnificent seven stocks into the rest of the index? darrell: what i would say is,

when you think about 2025 and what has to happen, the 10 year needs to stay below 5%, employment rate needs to stay below 5%. earnings growth needs to deliver and earnings rep needs to broaden out. inflation needs to stay less than 3.5%. the dollar, if you want to measure it by the dxy, needs to stay below 110. if you get those things to happen i think you are in a good place and markets can do well. anyone of those spiking above those thresholds start to inject risk into outlooks and the system. lisa: annmarie: i want to pick up on your point about tariffs. is in the market pricing in the fact that there will be 11th hours deals like we saw with canada and mexico? darrell: i think you have to separate the old adage of you have to take president trump seriously but not literally. we are learning that quickly, right? not all tariffs are created

equal. remember trump 1.0, the terrorists were surgical. it was washing machine parts, solar panels, and aluminum. this time they are very broad. 25% out of canada, 25% on mexico, 10% on china urine there at the country level. using the emergency powers instead of 232 powers this time, which is a very different equation. i think when it is all said and done the canada, mexico, and friends tariffs, including the euro zone, are more about leverage in getting what you want. china is more about geopolitics, right? that is where the real rub is and i would expect the durability of the chinese tariffs to stick and stay. that means very specific angst for certain industries, right? we still get most of our tech hardware and a lot of our semi's from parts of china, right? autos are a big element there. metals, energy prices, those are the areas.

it is going to come down to those segments, sectors, and industries where the tariffs are going to matter. annmarie: are you concerned about inflation rising? because this is the opening salvo when it comes to chinese tariffs. darrell: as i said, i think our inflation is stickier. you can call it more durable. whatever you want to call it. when we walked into this year the rest of the street said camino, if you measure u.s. cpi they were saying 2% to 2.5%. when you go back to lisa's 10 year, our 10 year is -- sorry. jonathan: i'm choking on my water. she does not own the 10 year bond. carry on. darrell: we have the 10 year at the end of this year at 4.75%. when we were doing the math about everybody else listing threes in the 10 year, you cannot make that work, right? i think rates are higher.

i think inflation is more durable and then inflation premium gets stacked into the yields. jonathan: scott bessent needs to talk to brammo about rameau's 10-year yield annmarie: i spoke to an aide last night and he says -- and they said he watches everything. he wants to know where oil is everyday. jonathan: coming into this year we thought maybe because they were going to run hot there would be a risk that the deficit would get array from them, the treasury yields would run away as well. january yields started to push-up back toward 5%. we have are treated by 40 basis points. when you hear the treasury secretary say things like i'm focused on the 10-year yield, how much comfort do you take from that? we talked about this to close out last year. would they be constrained by stocks or bonds? i think a lot of people thought maybe they might be regulated by the bond market. do you take any comfort from that? darrell: i think that is the right focal point. it matters for equity valuations. it will matter for earnings.

it matters for small caps. there was a lot of short positions sitting on the 4.5% line on the 10 year that scrambled to cover, which is why we ended up at 440 yesterday on the back of the treasury refunding, which was no news, and we did not see secretary besson to say i'm going to start layering out more and heavier auctions in the 10 and 30 year. the 3, 10, and 30 were all spot on where expectations were and have been for the last four months. this idea that they are going to stop issuing as many bills and start issuing more long bonds may be in the future but it is not them of the current. if that happens then you start increasing supply. the risk you run is the object -- the auctions get sloppy. you saw that in october 2023, where there was not enough demand, everybody was crowding into the short side of the curve in the bid to cover ratios were messy. darrell: jonathan: jonathan: looks like those changes may be sticking for now. darrell cronk of wells fargo.

on lisa's 10 year bond yields, just about unchanged this money. let's get you bloomberg brief. here is your yahaira jacquez. yahaira: we are staying on that story. sigh -- scott bessent says in order to lower borrowing costs administration's focus is on bringing down 10 year treasury yields, not the fed's benchmark. besson to said trump is not calling for the fed to lower rates. we'll have an interview with secretary besson today at 1:00 p.m. eastern. shares of arm holdings are falling 3.9% in the premarket. the company reporting better-than-expected third-quarter results but gave up a cautious revenue forecast for the full year. that is adding to concerns also seen by amd this week that the booming market for ai hardware is now on shakier ground. and the nfl is going down under. the league will play its first

game in australia in 2026. los angeles rams will be the home-designated team, playing a team to be determined later. australia is considered a significant global market, with a growing fan base of millions. it is your bloomberg brief. jonathan: shorter flight muscle i guess that makes sense. -- shorter flight for the rams, so i guess that makes sense. lisa: lost cause. jonathan: i have learned my lesson. next up, the morning calls, plus linkedin co-founder reid hoffman joins us. live from new york city, you are watching bloomberg tv. ♪

jonathan: lisa, that is fascinating. you've got to share that with the audience. lisa: we really don't. it is too long. jonathan: it is very interesting.

does not want to share it. equity futures positive by .2%. let's get you some morning calls. wells fargo lowering its price tag -- price target on four. your second call from evercore, upgrading carmax to outperform. that stock is positive by 3.5%. piper sandin lowering qualcomm to 1.90 -- 190, expecting handset sales this year. the impact of generative ai under scrutiny as investors questioned massive capex spending in the space. reid hoffman joins us now. it is good to see you. i said as you walked into the room, what could go right? i'm worried about what things could go wrong. let's put it that way. in the book, as we make these advancements over human history, actually it benefits human agency.

i'm worried that with aia goes in a different direction. tell me why it could go right. reid: the short answer is it gives you super powers across a large number of things. give it a try. you can decide, what should i make for dinner? how do i get medical advice available to me? how might i have a difficult conversation with a colleague? how might i do things in parroting that might be different? all of those things are superpowers that we get. jonathan: are you throwing lisa under the bus? lisa: you can manipulate what your kids look at if you sent them links to things that change their algorithms that give them more newsfeeds in their feet. there are ways you can play the system little bit and i think that is proper. reid: by the way, it helps them learn. it gives them news about the environment around them. if you are not actually in fact using these ai agents to learn

right now you should. one of the ways i do, and i approach a difficult subject, for example quantum computing, i stick of technical paper in and i say, explain this to me like i'm 12. superpowers. jonathan: my next question was going to be, how should we participate and shape this intelligence? lisa has given us one idea. could you give us another? reid: part of the key thing is that my very first chapter is about chatgpt, where humanity enters the chat. you have hundreds of millions of people interacting with that and the company watches what works and it. bison plea experimenting and getting which kind of things help you elevate your agency, then that helps the company know, these things really work, these things need to be improved. lisa: at the same time you talk about technical papers. one thing ai does well is work with technical details. not so much the social. not so much when you have to

have certain biases baked into some of these algorithms. what are the limitations to this at a time where people are saying, this could do qualitative jobs, and there could potentially be a lot of biases baked in? reid: so, every major group is working intensely on biases. one of the things that we did with inflection and personal intelligence is to teach it to be kind and empathetic. to have eq as important as iq. you see that in an tropics and it is spreading. you can have these kind of interactions betrayed in them in this reinforcement learning by human feedback to be much better than your average human. lisa: the reason i find this fascinating as i think about my children and what careers they could have and i'm like, no, not programmer because that's going to be dead. probably if you can be empathetic, those human skills are probably going to be more needed.

are you saying those too are going to go out the window? what is this going to do to employment? reid: i think chromebook -- think programming jobs are not going out the window. but it is eq as well. the fact that you had a, for example, a medical assistant that can help you with something or coach that might be able to talk doesn't mean you don't want to human couch. it more coaches the better and being able to make it work. annmarie: we were talking about ai for the good what about in the hands of adversaries? reid: so, superpowers. superpowers for terrorists, superpowers for criminals, superpowers for rogue states. that is one of the things we need to be careful about. all of the major groups have security groups working on this to mae an that is part of having so-called red team-ing plans and making sure that is minimized as much as possible. annmarie: how do you think the u.s. government should be approaching this? the market is freaked out because of deepseek and how much

this ecb is putting money into their version of ai you are in china and you want to look at things on the that are critical to the ccp it will not show you. so how does the u.s. government go about this? reid: i think it is important the u.s. government kind of continue some of the threads the previous executive order did, which is, you know, you have read-teaming things, do world leadership about what kinds of things are happening. there is connections in the u.k., ai safety, and the french one, and i think these are important to do. but i think this is one of the things were earlier -- where there will be multiple ai. i don't want ai to just be artificial intelligence or amplification intelligence, but also american intelligence. annmarie: what do you make of the tech industry being very close to this administration? i'm not just talking about your former friend elon musk. yesterday bill gates was walking into the west wing for meetings. do you think they can help the administration basically get

there faster when it comes to safe ai? reid: in short, absolutely. if you said of any western democracy government in the world, most especially the american presidency, the american government, should they be connected talking about how tech is creating the future? one of the things we can do to make better lives for american citizens, the short answer is absolutely. jonathan: what do you make of the backlash against elon musk more recently? his involvement in the government? reid: in the government move fast and break things should be marked -- be more compassionate and judicious. i think the question should be, look, there is reason government doesn't work like companies even though i think there is efficiency that is good and we need to inspect those reasons. annmarie: do you feel you are going to basically get some sort of repudiation because of where your politics were ahead of the selection, given how trump has basically cozied up to a lot of

individuals in the tech world? i have not seen you at mar-a-lago or walking into the west wing. reid: i think the thing we most want as american citizens is for our government to succeed. succeed for our industry, succeed for our citizens. that is what i most want and i think we all do. lisa: you have been an incredible investor. you were an early investor in openai. you invested in linkedin. so many of the behemoths currently. do you see a lot of upstarts right now that look like they could become the next big thing in some of this machine learning to knology? reid: short answer is yes, although picking them is one of the difficult things about being a bit -- a venture capitalist. back a few years ago i was arguing that we were five large tech companies, that i would not have predicted that nvidia would have so quickly become one of those seven and then going to tan. we are in their progress and

there are a number of startups that are creating amazing technology. the question is product market to scale. lisa: what do you think the next technological evolution is going to be that could be a chatgpt moment for deepseek moment or one of these sort of breakthrough a-ha's? reid: this year all of the major ai companies are working on amplifying coding. for example, for your kids and other things, will be actually all of us will have a software engineering assistant. and that will make all of our work a lot better, and that is one of the things i think has not yet entered the consciousness. that is one of the things coming, and of course what i'm doing with manas, i'm hopeful we will have some great early results in curing cancer. jonathan: and how we can accelerate the scientific process. thank you, sir. appreciate your time.

reid hoffman of manas ai and a whole lot more. up next, some jobless claims data just around the corner. that drops in about five minutes. terry weisman is going to join us and sonia meskin. this is bloomberg. ♪ ♪ i'm thinking... (speaking to self) about our honeymoon. what about africa? safari? hot air balloon ride? swim with elephants? wait, can we afford a safari? great question. like everything, it takes a little planning. or, put the money towards a down-payment... ...on a ranch ...in montana ...with horses let's take a look at those scenarios. j.p. morgan wealth management has advisors in chase branches and tools, like wealth plan to keep you on track. when you're planning for it all... the answer is

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jonathan: she's on the s&p 500 positive by .2%. just about unchanged on the nasdaq. in 20 seconds we get some economic data. look out for jobless claims. the estimate, to 13,000. -- 213,000. the treasury yields look like this. yields up a single basis point. we could rename the data check. that would be good. jobless claims dropped. at the numbers look like this. the estimate was to 13. the previous week was -- 213,000. it is a small upside surprise. 219,000 against an estimate of 213,000. 219,000 on a historical basis is

exceptionally low. just a small bounce from the previous week lisa: you see a small take-up -- take up. -- tick up. it doesn't indicate things are falling off a cliff. we heard from jonathan pingel saying this might become the more interesting data point at a time of stagnation where the jobs number is from a generator. jonathan: the bond market, the yield is higher best single basis point. going into tomorrow that random generator, that number we get on friday morning, payrolls friday is the most important number in the world and it is like the random number generator that spits out something like 200,000. lisa: that is better than having some conspiracy theory. it has been a messy number. there are criteria that go in. maybe it is more accurate.

just view it as a round number generator. jonathan: the estimate for the random generator tomorrow is 170,000. that is the medium. terry weissman joins us for more. it is good to see you. lots to talk about in the economic data. we have to start with lisa's bond market. this administration focused on the 10-year yield. i asked this question of darrell cronk earlier. does that bring you comfort? thierry: absolutely. first of all, it is an implicit admission that the short-term yield is not within the purview of the treasury department or administration. that is great, because it is effectively an admission that the fed should be independent, right? they deal with the overnight rate, they deal with fed funds and what scott bessent is saying, we deal with the long end of the curve. that is natural, it is the treasury that issues bonds and long-term bonds. you would see the logic behind

the idea that it is the treasury that should have some purview over the long end. he also said something different. he wants to bring the long-term yields down by virtue of lower structural inflation. and that comes through better productivity. i think that ties in nicely with some of the policy agenda of the current administration. it all fits together. lisa: it makes some people bullish bonds, and that is what we saw, especially when you add the funding announcement that came out completely unchanged. just how much more bullish did you get on that lovely 10 year note yesterday? thierry: i didn't get that much more bullish because what is going to drive sentiment for the 10 year are things like the deficit and this was not so much a statement about the deficit, although there were anecdotal stories out there about what doge is doing. i got a little more excited about that part of it that seems to suggest they are going to be hands-off with regard to the fed.

the dollar rallied and i think to some extent the reason the dollar rallied is because people were interpreting this not just as something that has to do with the long-term yield, but has to do with the fed funds rate and fed independence. what have lisa: you made of the move we have seen in the dollar? initially it was the haven play, and it was unclear and people walk that back and there was questions about the loss of american exceptionalism, the deficit. d the make of some of the reaction they have gotten recently? thierry: the dollar has strengthened a lot. you could interpret the tariff announcements as a situation. it is not very fundamentally a weak story for the dollar but so many people have built up long dollar positions that they may have used the announcements as a reason to take those off, and therefore we had some volatility in the dollar. the dollar seems to be strengthening again. the administration seems to be

granting more independence to the fed. that is certainly not part of the problem. annmarie: you were talking about tariff bombing when it comes to euro and china -- europe and china, where is the tariff shelter? thierry: it is difficult to find one, because when people get worried in the market correlations go to one and it is difficult to hide and find any pockets of stability or robustness or strength. i will say that some of the bad news with some -- with regard to canada is already out. you want to go to those places where the news has already come out and try to avoid the ones where the news is about to come out later, right? if the news is out it is affecting the price and maybe there cannot be much more action. i point to canada only because the worst seems to be over. we may revisit the issue in 30 days, the initial shock is gone, it is past us. that might be a good place to hide the japanese yen and terms of the fx market. i think the boj is very cognizant of the need to assure

wage the trump administration -- to as suasion the trump administration. annmarie: he says europe is going to be next. how are you looking at the euro? is this parity for this year? thierry: we don't think it is going to get that bad. a lot of this is anticipated. i do think that ultimately as we get closer to the end of the year there will be compromises on the main issues that divide the u.s. from the eu. things like energy policy, positions toward china. i think these can be resolved. but trump being trump still wants to use the divisions that have prevailed over the last few years to try to get his way and try to get the compromise to be more in his favor. over the next few weeks i do believe we may see more tariff bombs directed at the eu and, again, you want to think about, actually, at this point, about finding those places to find

shelter. jonathan: directed at the eu and maybe not the u.k. cutting by 25 basis points. a couple voted for a half-point reduction, including one prominent hawk, which is a big change from the likes of catherine man. what is the bank of england doing signaling interest rate cuts, more to come, at a time when inflation is still above 2% and will be so for the next several years? thierry: i think they are looking at the direction as opposed to the level. if you look at the u.k. services inflation has been very sticky until about two or three months ago. even there, where people had expected no stickiness and no decline we have seen a precipitous disinflation in the last month or two. that is giving them comfort that underlying structural inflation has come down and that this 2.5% we are seeing in headline cpi is real. it is not about to evaporate and we are not about to get

inflation again. jonathan: no stagflation then? upgrading your outlook for inflation is not a good thing to do. thierry: this not a good look, but i don't think there is much the u.k. can do in the short-term about the growth outlook. that depends on productivity, it depends on demographics. these are not things you can fix overnight. even in a liberal economy like the u.k. line lisa: -- u.k. lisa: these to be this belief that there was a constraint on the bank of england and ecb in cutting rates because the week as in their currency would lead to an uptick in inflation. why is that no longer on the table? thierry: i'm not sure that it is no longer on the table. if the currency were to decline quite a bit i think it would sound off alarm bells about the prospect for pastor into inflation. the issue is we have not seen a precipitous, large, consistent decline in these exchange rates.

if it were to drop over the course of the day and would be taken to imply a collapse of markets in these currencies they would react, but these are slow moves, these are trending lives, and i think because of that there is no sense of panic they need to address with interest rates. lisa: there is a bigger point here that maybe some of these single mandate central banks are becoming more dual-mandate banks, just incognito. they are going to allow weakening in currency, inflation to remain higher because the emphasis needs to be on growth at a time when they are being left behind. how much do you think that is a template for other central banks, namely the ecb, in the weeks to come? thierry: let me say that is a dangerous policy to follow. when you see so -- slow growth you don't know if it is the poor aggregate demand or the lack of an expansion of the economy's possibilities. i.e., an expansion of the production frontier. if you are cutting rates in the face of disinflation that is

being caused by weak demand, that is ok. but if you are cutting rates on the back of declining growth being driven by poor supply conditions you may end up simply creating a lot more inflation. central banks need to make a better distinction when the issue projections about gdp. what is the underlying driver here? because what the underlying driver happens to be should play a big role in how they address the slowdowns. jonathan: this was a smart. it is good to see you, as always. a bit of a clinic on foreign exchange and the bond market from terry weisman there. welcome to the program. 10 minutes ago we got some economic data. jobless claims came in, 219,000. the number we were looking for was 213,000. the previous week was a revised 208,000. things coming in just a little softer, but with the emphasis on

a little bit. a bit softer on job openings in the job data we saw over the past few days as well. the ism also just a little bit softer. taking some heat out of the american economy seems to be the big takeaway this week. lisa: and it is welcoming. people are welcoming the idea of taking heat out of the economy because it is not coming with it falling off of a cliff. i do think it is interesting, this idea that we are seeing stagnation when it comes to job growth and this question of when that creates fragility and when that is actually something that just is a feature of a very stable economy. jonathan: we will get payrolls tomorrow and it will be, like, 280,000. i have no idea. the estimate in our survey, one hunted 70,000. the previous month, to hunt a 56,000. sonia meskin dropping back. what are you looking for? why is january so hard to forecast? sonia: january tends to be quite

seasonal. there is also seasonal effects as well. we have had this historically for a few years. in addition here we are going to have benchmark revisions. the underlying assumptions of how we are estimating data my changes well from the census bureau. we are looking for to hunt a thousand, but as we have published, this is just an exercise in predicting noise. lisa: exercise in predicting noise. we should collect these. exercise in predicting noise, a random number generator. i wonder what your take away is from the random number generator or exercise in noise, the stagnancy of this market. the stagnation of this market. the idea that we are not seeing a lot of hiring and we are not seeing a lot of firing. do you take that as implicitly and negative, suggesting a brittleness that makes this labor market were susceptible to some sort of shock? that is the way some people have

been describing it. sonia: that is possible, and tariffs could be one of those shocks. we would expect the unemployment rate to go up if the tariffs against canada, mexico, china are in fact sustained. especially canada and mexico. the u.s. is doing considerably better than the rest of the world, so that is a strength for us, of course. annmarie: jp morgan had this survey and they talk about tariffs being the biggest impact on the market in 2025. does it even matter what the non--- the nonfarm payroll number is tomorrow? sonia: in terms of predicting noise, probably less so. we would expect camino, if for example the number comes in lower than what the market expects i would think the market would react. the number comes in close, as usual, folks are probably going to look through it more and focus on terrorist. annmarie: you don't think canada and mexico get implemented, but we saw of china, this is the

opening salvo. chum says he is going after the european union next. i do you think about tariffs for the rest of the year? sonia: we think about it as two ways, two paths. one is the threat of tariffs. that is causing uncertainty already for businesses. we have seen this in the ism manufacturing survey, for example. in others, regional surveys. the other one is the impact of tariffs. if they were to get implemented and they had staying power. in the latter case it is a bit easier to estimate, though there is considerable uncertainty. we would expect a bigger hit to growth. jonathan: something absent from this conversation in the past week i'm a why the conversation about ash wino conversation about the fires in los angeles? what happened to that story? sonia: it is a terrible tragedy, of course, but unlike the staying power of tariffs we would expect there to be

rebuilding exercise and reversion to trend. jonathan: you are not expecting any in the economic data? sonia: we are. but we are not expecting this to be an effect -- in effect for the rest of the year necessarily. jonathan: it is good to see you. sonia meskin of ubs on the data we get tomorrow. we have random number generator and an exercise in predicting noise? lisa: yes. is that the primer for tomorrow? annmarie: stay tuned. lisa: i think it is important because you can take something you consistently say from the way markets respond to this number generator, and i will say the bigger point is going to be less the random number and much more the way that they revise the numbers from last year. just how much momentum did we have in the labor market going forward? jonathan: we have been mentally revising those numbers down haven't we? annmarie: 70,000 minimum people say they take right off the top.

jonathan: what are you doing over there? what is happening? [laughter] want to tell us what that was? forget about it. sonia: it is just noise. jonathan: it is 8:30. sound effects now. 2-year yields hired by basis point. let's get you an update on stories elsewhere with you yahaira jacquez. yahaira: four chairs are falling 5.7% in the premarket. the automaker warned its profit could follow by $2 billion or more this year, for blaming the weakness on falling vehicle prices at the same time it is working through expensive new model launches. on top of that ceo jim farley told bloomberg that president trump's tariffs could cost the industry billions of dollars. meanwhile, roblox shares are tanking in the premarket, down 18% after the online game platform reported daily active users that fell short of analysts' estimates. the numbers came in at 85.3

million, about 3 million fewer than analysts were expecting. the company also lowering its booking estimates for 2025. and 100,000 organic eggs worth about $40,000 were stolen from the back of a distribution trailer in central pennsylvania. they police are investigating the aft, which comes after flu outbreaks cut egg supply, causing a massive rise in prices. that is your bloomberg brief. jonathan: thanks for this morning. what did you make of that story? lisa: i think eggs are the new gold. i think you are having a situation where you might have to pay eight dollars instead of eggs you are getting eggbeaters in your acne often and it is leading to a real security breach at a lot of these egg delivery sites. annmarie: i love how they said they had to be these organic eggs, so clearly they are available to chong. are you going to the black market to find these? jonathan: for organic eggs? are they going to sell them on canal street? annmarie: maybe. jonathan: alongside the louis

vuitton handbags? a dozen eggs? annmarie: maybe you can pay a premium for the fake louis vuitton and get eggs inside. jonathan: i still don't clear out why they clear out canal stret you know, i don't understand that. it is a tourist attraction. just clear it out. i don't understand. what i don't understand about that, what i don't understand is just around the corner in soho you have them pain through the nose when it comes to the rent for those buildings. imagine how much that costs to rent those buildings and have a presence there and then around the corner on canal street they are selling fake handbags. that doesn't make sense to me. lisa: you think they are cannibalizing on canal street from the soho stores? jonathan: i don't think it is good for the brand that there are a lot of fakes going around new york city. just put it that way. next, we set you up for the day ahead. you are watching "bloomberg surveillance." ♪

jonathan: the opening bell a little bit more than 38 minutes away. equity futures positive by .2%. on the nasdaq 100, just about unchanged. with some morning movers let's cross to manus cranny. manus: honeywell splitting itself in three. elliott got what they wanted, but on the guidance for the numbers this year it is a miss on earnings-per-share. sales and free cash flow. look at ford. he just heard the story there. $2 billion of profit dropped. jim farley ones billions of dollars will be lost if we go for full tariffs. he is asking for reasonable negotiation. have a look at roblox. you have daily active users

coming in 85 point 3 million, a lot less than the market had expected. but 73.5 billion on this. down 19%. that is a shock. jonathan: thank you. that stock getting hammered. let's get to something eventually to look forward to. at 1:00 p.m. eastern time bloomberg sitting down with scott bessent. we will take that time bloomberg tv and bloomberg radio. amazon results coming after the closing bell on friday. the main event, the payrolls report is just around the corner. and we will get some fed speak as well. we will hear from bowman and kugler. next week we get some mcdonald's earnings, so look out for those names. the next week once we get through payrolls we will be talking about cpi. lisa: maybe cpi will not be a random number generator. i want to say that what i'm watching very much are some of the projections by some of these companies. in particular the likes of coca-cola, pepsi about a strong dollar. with respect to amazon, efficiencies.

the reason why is because they had a lot of spending to justify and suddenly they can talk about the application in reducing some of the headcount. and we are going to hear about that more. jonathan: annmarie: the markets are looking at this when it comes to uncertain. their guidance, they are not putting into consideration some of these tariffs that might hit the bottom line. might make their supply chains more challenging. jonathan: what is your question for secretary besson this afternoon? lisa: what is the level of 10 year treasury that really is the check on some of these policies? and the other question is, does he still plan to turn out some of the debt and longer duration bonds? why did that not come in yesterday's refunding? jonathan: that would be mine, complains we heard about the chairs or his secretary, the issuance at the front end of the curve. the acquisition of active -- activist treasury issuance. it is early days, so i don't want to draw conclusions about the last 24 hours and say they will not be terming out the

debt. i don't know the answer to that, but i would like to know more detail. what would it take to turn out that debt? how are you thinking about things? now you are in power. is this beneficial to keep things as they were under treasury secretary janet yellen? lisa: front of that is the danger zone for the 10 year treasury yield. if you are watching that one does it become a red flag? jonathan: it is worth repeating it is only week three. it is only week three. annmarie: it is, but scott bessent was on this program throwing daggers at treasury secretary ellen, so it felt he would go in and want to ameliorate the situation that he said is unfair and they manipulated the bond market. it is a lot harder when you have the office and a seat do that. jonathan: he is only just getting a full team in place. we also need to figure out how much additional issuance there might be down the line further out as they get this tax package past. lisa: for now he can punt by saying it is only week three,

guys, stop drawing conclusions. he probably will not answer that but these are legitimate questions at a time where this was one of the potential headwinds to treasuries long-term. jonathan: shall we check out your bond market? the two-year right now, 4.20%. on a 10 year we are just about unchanged. tomorrow it is about the random number generator. an exercise in predicting noise. payrolls report is around the corner. the estimate at bloomberg is 1.7 0 -- 170,000. we will catch up with sarah house of wells fargo, priya ms. ruck, ellen zentner, and jeff rosenberg of blackrock. and a whole lot more. thank you for choosing bloomberg tv. this was "bloomberg surveillance." ♪

katie: features trying to put higher despite disappointment on the earnings front. vonnie: bloomberg open interest starts right now. katie: disappointing others from industry heavyweights. ford sees a sharp drop in profit as qualcomm faces slowing phone growth. honeywell moving into three independent companies following pressure from activists. yields, not the fed. scott bessent says the administration's focus is on the 10-year treasury rate. he points bloomberg at 1:00 p.m.