look, the bond market has been saying that jay powell failed. today the stock market said oh, yeah, you're right. he definitely failed. the people are basically writing off anymore cuts. there's no more cuts coming from the fed. the fed still thinks there are more cuts coming. if you listen to some of the fed speakers they say oh, we think there's still room to cut. there's no more room to cut. the discussion is very quickly going to change to does the fed have to hike. right now, inflation has been stuck and way above where it needs to be, but if it starts to climb, then we are going to get people very seriously looking at fed hikes in the future. larry: which will be very badly received. >> jay powell needs to step down if they start or need to hike because he pitched everything on the idea that he was going to get it right this time. i mean, think about all the mistakes he made. he made a mistake at missing inflation when it came on board and then he messed this up again when he thought inflation was going away. he's too doveish. brian: if th

jay powell made clear that some members folded and expectations for what they see the incoming president't. it was a real mixed bag. that doesn't make for a very useful forecast especially when it comes to something like inflation, does it? >> know, it makes everyone's job a lot more difficult but i think this is part of uncertainty as the incoming trump administration takes over on january 20. we are going to have to see what he goals out on day one or one, whether or not those tariffs are going to be taking in right away, the intended 20% blank iteris, 25% tariffs on canada and mexico and 10% on things coming in from china and that was already at 60%. abbottabad is going to be dependent on what exactly plays out, how long they are going to be for, and i think that is what the fed is going to be watching. there's a lot of uncertainty. this is why pointed out some fed members took that into account their forecast. some did not, and some refrained to say. so i guess nobody really knows what is going to happen. scarlet: i know you're in canada so i have to ask about canada. when it comes t

do you think grabbing jay powell by the lapel and saying cut the key policy rate down is the right step? scott: i think bank of canada and ecb can cut, because the canadians and the europeans exercise some level of fiscal prudence. they are not two-footed driving. there is a natural economic cycle, and jay powell has been easing, for whatever reason, he felt compelled to ease financial conditions last fall, after the fomc meetings in november and december. the statements were very anodyne, and he walked out at a press conference and gave very dovish guidance of rate hike, rate cuts are coming and a massive ease of financial conditions. by doing that, what happened? he pushed up the stock market, which benefits the top 20%, and then we are back to the bottom 50% who don't own assets, they have debt, so rates have had to stay higher for longer. i actually think that he has hurt biden's chances by reigniting inflation, pushing economic growth, re-accelerating economic growth, when it could have been slowing. and i think they could have been cutting rates, but they are not. and i would also

jay powell has been for whatever reason, he's felt compelled in this decision last fall. november and summer and he walked out of the press conference and give guidance and great cuts for coming the financial decision. by doing that, question of which benefits the top 20% we are back to the bottom 50%. the rates have had to stay higher for longer. the igniting economic growth and reseller reading when it could have been slowing, cutting rates. i would predict it won't slow down inflation, i think it will be an economic wobble. >> a quarter of negative growth or something? >> or a slowdown, and economic slowdown. administration has tricks up their sleeve november 6, november 7100, 150 billion for the retention text and start getting mailed out. >> student loan forgiveness and a variety of others in the economy. >> back to the younger voters turning on president biden so i've seen the numbers and under 35 cohorts are attached to the democratic party and a big portion of that and the other thing philadelphia fed has been measuring credit card delinquencies. in the income gro

>> look, the 10-year yield is filet mignon and jay powell is spam when it comes to the markets.hing personal, but the free market of the investors, traders and speculators are selling bonds, they're betting on higher inflation, massive debt and deficits. i dent know exactly what it is, but all i know is it's been persistently high and you just broke above a yearly high and i've got to tell you, the old high is 4.97. if you get through that, that's more head winds and i use the one, two punch and there's not much worse fundamentally than much higher oil prices, energy prices and a higher 10-year yield, which is the cost of capital from the consumer all the way up to the biggest of business, and i think that's what you've been seeing in the market over the last bunch of weeks that direct correlation is really impacting things right now. charles: you know, i started the show off saying that for a long time, almost a year, that the conventional wisdom of wall street said sell the mag 7 and we'll have rotation into the other 493 or go equal weight or whatever it is. that hasn't come

the dollar has been on a tear since the fed meeting nd jay powell's comments that he sees fewer rate the year, in 2025, that is. let's discuss these dynamics with our next guest. dominic, good morning. happy new year to you. i would like to understand what is the outlook for the dollar here? we are basically witnessing a little bit of a change in narrative for the greenback off the back of that report from the washington post. do you think this change in narrative is likely to continue? are we are track to see a softer dollar? >> good morning. happy new year as well and thanks for having me back. i think there are two competing things here. there is a more thematic story and i think that's very much in place. that revolving around the ongoing or i am mplementation o tariffs. it seems clear that is one of the key sort of policies that trump wants to pursue. i do think that feeds into a stronger dollar over a multimonth horizon. the other aspect is clearly the u.s. economic performance in relation to the rest of the world. from the thematic perspective, there is room for that to run an

other movement from within the federal reserve, like in specific posts work -- we are bringing up jay powell it was such a big question at the recent -- recent fomc about whether he would step down or change his role. here's chairman, but even if he steps down or is removed in some way, he could still stay on at the fed. mike: he could. his term as chair is up next year and the president elect has made it pretty clear he wouldn't reappoint him, but he could stay on the board until 2028, preventing trump from the point anyone else within the board to be chair. you don't have to give the fed governor a chair of the federal reserve, but the chair of the open market committee that makes the interest rate decisions doesn't have to be on the fed. scarlet: like this speaker of the house situation. mike: right. he could still be on the board with a different person serving as chair. scarlet: like elon musk or something? mike: right, someone from the outside. probably none of this is going to happen, but it is kind of fascinating to contemplate. scarlet: good stuff. michael mckee, alway a pleasure to

remember, jay powell's always discussing main street expectations, and in the past he's taken emergencyions based on data just like this. whether the fed can be accommodative or not and this market rally without an accommodative fed, we know it can, but there's a large section that wants its cake and eating it too. hardly anyone thinks a rate cut is going to be anytime soon, but some say, guess what, folks? no more rate cuts. yesterday i was honored to participate in a round table which has become an annual event, and it's really wonderful. hosted by double line's deputy chief investment officer, jeffrey sherman, and i want to bring jeffrey in right now. jeffrey -- >> hey, charles, how are you? good to see you again. charles: you too, man. you did an amazing job yesterday. i'm glad this pays a lot less than you do, or i'd be worried about my job. [laughter] let's talk about the data today. the jobs report was stronger than expected, that michigan sentiment number sent a lot of ripples through the market. your thoughts. >> yeah. i mean, as we've been seeing, you know, i kind of put this

there's no need for them to look at what jay powell and had fed are doing.he economics are so stark christine lagarde has been focused on growth. whereas andrew bailey has been focused on the outlook he needs to shift now and look at the bond market and fiscal headroom and the pickle the government have found themselves in and respond if he doesn't do it sooner or later, he will find the uk in had a more challenging outlook for growth. >> from what you are telling me, the biggest pressure, you said there is actually coming on the fiscal side, is because of the budget we will be on obtain in w government is number 11 and 10 listening to us in the bond market at the moment >> yup in the u.s., donald trump doesn't listen to many people, but the bond arket is one thin he should be listening to. i'm not sure of andrew bailey is listening to he should be i would be telling him to ramp up the rhetoric about the interest rate cuts over the next 12 months. the government will not change their decision making now. they've got another budget in march. if the outlook do

economy is on strong footing, why has the market flailed a little bit with the indication from jay powell that is he hawkish going forward? it is economy is strong and wage growth is strong. i know you are bullish on consumer discretionary, why is the market faltering in last couple weeks? >> i think to a certain extent, climbing the wall of worry. they will go up and come back down again. really, what is happening here is they are trying to get understanding around what policy is going to be. it goes beyond the fed and what will happen with immigration policy and what will happen with trade policy and which industries or sectors are impacted by that. that's what the market is really waiting for here. the fed is important, but policy is going to drive this as well. >> let's talk about the sectors you are bullish on. as we look at the sector going forward, we have a number of economic reports that give us insight in the job market and also the fed's path forward. is there any one of the reports that is especially important to you with the bullish on consumer discretionary? >> i think the j

the market and there is also a potential for a little battle with the trump administration and jay powellwe saw before in the trump 1.0 administration. >> david, we don't want to get too far ahead. let's focus on today's action if you don't mind. i want to get your word of the day. the word of what we should expect today or this week. >> i think the word of the day is the university of michigan or umich as we call it. that piece of data got under the skin of the market on friday. it was a huge spike in the long run expectations from 2.8% to 3.5%. it is generally revised down. that has the market very nervous. we're not seeing that in the price action. we're seeing that as a scare. meaning people don't think inflation expectations are doing that, but the reason why the fed is going to be a little more stubborn in terms of its rate moves in 2025. that's just got people pricing in a mistake more aggressively. i think that's how i'm going with it. that piece of data to me is the word of the day. the thick ng that got the marke rattled. >> david zervos. thank you. >>> here's what to watch in t

the federal reserve expected to take the pause at the first policy meeting of the year, fed chief jay powell governor lisa cook issued more caution yesterday, the labor market has been somewhat more resilient while inflation has been stickier we can afford to proceed more cautiously with further cuts vice chair michael bar the agency's top banking regulator has announced he will step down at the end of february. members of the trump administration and a lot more deregulation. what are your thoughts on the bed move and how that fits into allocation strategy. >> the fat has gotten more hawkish even though they cut in december they signal they will do fewer rate cuts over this coming year when we spoke we were talking about how the fact the consensus was 5 - 6 cuts coming into december and the end of 2025 and that needed to be ratchet back. we need to ratchet back, i would expect one to two cuts in as a mentioned if inflation was being sticky the lack enter likely to keep it on hold for a much longer period of time it's a reflection of two things it's a fact that inflation has not come down as

really a big vote of no confidence for jay powell. i'm afraid it is.fraid it's bad news for the institution that you and i care deeply about. the purpose of cutting rates is to cut rates. if when you cut rates, bond yields become more expensive. that's bad for the fed. it's bad for a for another group of people that are coming to washington. the bond market is basically saying that they have figured out that the trump administration is inheriting a fiscal mess, and the congressional budget office, in their last forecast, said that the trump administration will be funding themselves over the next ten years at an average interest rate of 4.1%. boy, that looks low. interest rates are at 4.7% now. this is bad news for the tax bill that you and i care about. that will come up over the next couple of months. yes, indeed it is. so speaking of funding, the great larry lindsey. lawrence lindsey, right. brilliant. right. we all love larry lindsey. absolutely. wrote a great newsletter on this. if you put a 10% tariff, universal tariff 10%. i mean, europe has 20%

add to that, donald trump has historical been critical of jay powell.e said in recent months he thinks interest rates are too high. you see the tussle with the institution that tects price stability. we have strong earnings growth and economic growth as well, but whether investor confidence will start to show cracks, i wouldn't be surprised. that's why we are more supportive of the equal weighted index. >> interesting. i guess it will be a particularly important and relevant reporting season. explain to us, therefore, the best positioning of the portfolio at this time when you are about hear from companies with q4 results and the market when it comments to bonds. what is the best approach going into the year? >> i think don't write off europe for a start and don't write open gilts. keeping a portion in the portfolios in the area where there is more scope for upside than for example in the mag seven in u.s. with nvidia meet their forecast. the stock's been weak because it has done no better than investors are expecting. keeping that diversification is cr

. >> i want to be a little bit more sympathetic to the really difficult job that jay powell and his colleagues have. they are reading the data coming in in real time. they are inferring from the real-time data what they have to do. we were a little bit surprised by the 50 basis point cut, the soft readings in the labor market. we thought, at the time, or exaggerating what was going on, but the fed did not want to take any chances at that point, and as they were just starting to lower interest rates, they knew they were further away from neutral. if you are going to make a bit of a mistake, that would be the time to, perhaps, cut a little bit more, so i think they were doing risk management. one of the paragraphs in the minutes that just came out was all about the risk management discussions. now, they are reading the incoming data and asking, how far do we have to go? our view is, probably two more rate cuts this year. the economy will slow, but not crash for a while. there is huge uncertainty, though, about what will happen with tariff policy, as steve alluded to, what is going to happen with

he doesn't want jay powell to get in the way. he doesn't want chuck schumer to get in the way.nts to hit the ground running, start going after big reconciliation bill that would cut taxes, open up the fossil fuel spigots and close down the border. he wants a blue collar boom and wants to say to his new coalition of working folks, whatever color, say i am keeping my propses. i'm just saying right now -- promises and right now the fed is making those promises look a little shaky, in the shorter run. >> it is. this cut that they did in september, which was very irresponsible that locked them in the november and december cuts was a terrible idea. it has put trump's ability to get his agenda through a bit in danger, but i will say he should keep pursuing it and shouldn't let what's happening in the bond market stand in the way. there'll be people that say no, no, you can't cut taxes because of the bond market vigilantes are coming in. he needs to cut taxes and latest gallop poll shows 54% of americans personally expect trump to cut their taxes. if he disappoints the expectation for

make the best decisions you can knowing you'll be criticized whatever you do, and i don't think jay powelll worry about the reaction, nor should he, and i think people around the fomc table based on everything i know will try to make the best decision they can, but people out there should just understand, yeah, inflation has gone along sideways, one reason to slow down. and then the structural shifts are another reason. and i think part of doing your job is to be a risk manager not to be a prognosticator if you're at the fed. give the same advice to clients also. and you got to let this situation clarify and that's okay. i think the biggest mistake you can make, act like you know more than you do. launch in, take further action when the situation's unclear. it will clarify as we head past january and into the spring. and they'll act accordingly and act appropriately as becomes clearer what the next step ought to be. >> mr. caplan, leave it there. appreciate your time. see you soon. >> good to talk to you, scott. >> robert kaplan. >>> news breaking on medical devicemaker striker. we have da

is there any of this a lack of confidence in jay powell?rtainty and data dependent reflects that and if we look at interest rates right now, people are really focused and last time they were this focused back in april and this time in late 2023, family are trying to understand why we're getting five month moves where rates go up and down for five mo months d in a very reflexive environment. charles: and the u.s. dollar verse market concern situate i have a minute to go and talking about this and you went over the ales model in different variables and there's a lot of factors and what's interest sergeant two 4% stock withs a sale rating and hard to get a sell rating on wall street and by the time they're at a sell, it's a buy and that's besides the point. folks are watching the show and saddled with stocks they've been with for a long time and have no clue or idea how do i let this stock go? some is ego and some is legitimate of the least amount of up site pomoxus ten and shall simpler way of going through something like that? >> i'd say rig

the labor market was not was not slowing the way that jay powell told us it was in september when he to make that very bold 50 basis point rate cut. >> the higher than expected jobs report proved to be bad news for wall street, too. today, all the major indexes tumbled down. the nasdaq slipped 317 points, s&p sank 91 experience the sweeping drama of manon, where opulence brings consequence in a lavish world of love and betrayal. ♪ tickets at sfballet.org ferry says it's expanding its snack bar and drink menu to include alcoholic beverages at all hours. >> the new concessionaire allows passengers to purchase premium coffee, juice, baked goods and cocktails on every single trip, including the morning commute. okay. yeah. there you go. the new menu is replacing the ferries free coffee program. the bay ferry says it offered free coffee in an effort to boost ridership. and because the previous concessionaire just couldn't provide staffing at all times, the new concession operator is now returning bar service to its pre-pandemic norms. bloody mary before i got there, first thing in the mor

the labor market was not slowing the way that jay powell told us it was in september when he had to toe that very bold 50 basis point rate cut. made no sense. and if now it makes even less sense. stuart: is this strong jobs report, is it good for trump? >> so listen, it could be good for trump unless it suddenly is taking root as inflation. if we see inflation take off again, then it's not going to be so good for trump, right? if they can hold it, if inflation stays at bay but yet we have a strong economic report, that will be good for the economy and then good for trump, for sure. but if inflation really starts to take off, then they'll flip if it around, and they'll blame trump and do all this stuff. meanwhile, the seeds have been planted now, not when he was president, but now. stuart: here's my problem, when the yield on the 10-year treasury goes to 4.76 as it is now, you can't expect mortgage rates to come down. mortgage rates are going to go up. i think that's pretty much built in. and i notice that the yield on the 30-year treasury bond went to the 5%. if it went to 5% on the 10

jay powell cease these numbers are going up. budget deficit is going up. he raises interest rates.s country is thrown into recession and republicans get wiped out in the mid terms? that's what i am worried about. >> right. >> laura: without real cuts. i know washington never wants to cut. i know you are a fiscal conservative but we have seen spend going to up across the board. >> yeah. i think what you have to do and i think the reconciliation is great opportunity to do it. slow the rate of growth. you need growth in the economy. you need pro-growth policies on the tax side regulatory, energy policies all things that we care about that we want to do through reconciliation as well. slow to the rate of growth particularly in some of the mandatory programs. the entitlement programs. that's something that congress hasn't been able to do for a long time. i think the president has the mandate. i think members in the house and the senate republicans both want to get this done. i think it's important because if we don't, you are right. it's a train wreck. it's a fiscal train wreck. we can'

. >> she also said inflation was transitory along with jay powell. they've been lying through their teeth as relates to inflation. we all know inflation peaked at 9.1%. maria: 9.1% on the cpi. >> under their watch. that's devastating. look, the $7 trillion of fiscal stimulus, that is what caused an increase in demand when demand exceeds supply, prices go up. i mean, that's economics 101. most people understand that. we've been talking for the last year plus about the fed potentially cutting rates, how low might they go. i'll tell you, i read a report over the weekend, i couldn't find where i read it but they're now projecting that there's actually a 40% chance of a rate hike in 2025 now, not cuts, that the fed might have to reverse course and actually hike so we'll see what happens there but real quickly on the jobs report -- maria: i think they look like egg on their face, if they raise rates this year. what are we doing? raising rates and then cutting rates and raising rates again. >> a political move, obviously. it's not good. they've had egg on t

jay powell keeps pointing that out that it is unsustainable.ou wrote about a closing out 2024. the risk of a 2022 repeat, how great is that risk? torsten: much higher than what the probability is signed by the market. the 60/40 portfolio underperformed. rates went up and inflation was going up and at the same time stocks went down. now the nike solution -- swoosh has been flattened out. we have a few cuts priced in. imagine this expectation start to go up. maybe we will get another hike. a lot of equity investors will say in that case, we have the trailing pe on tesla at almost 200. that is why some stocks are incredibly expensive. maybe the fed has to do something more to hike rates again. i think more sensitive names will certainly see a bigger hit. given all the stocks driven by a handful of stocks, i think that makes it much more sensitive to the nike swoosh going up. jonathan: good to see you, sir. torsten slok of apollo. the second hour of "bloomberg surveillance" around the corner. we will catch up with keith lerner, french hill, jason t

no, i wish he was -- >> if the numbers are lousy, what's jay powell really think? and remain lousy for a couple months, i think jay would be right back in the game is what i think. i think he was very insistent that he was not going to allow -- >> does that mean the markets have to be, like, they want bad news? >> i think they do. >> is that what we're talking about here? >> you know, i always puzzle over that, and i hope people like you could explain it more to me, because if the economy is growing more, i think -- >> that's what you would think. >> we've talked about this a couple times. a couple weeks ago, we did a story on the higher productivity and waller came along and confirmed my report, thank you very much, that higher productivity means a higher neutral rate over time. you have the fiscal spending issues, which is the supply, and you have the possibility, perhaps, of a boost of growth that might accompany the incoming administration. so, there's reasons -- >> treasury yields. that's been where the market's been moving. the equities market has moved the o

i think what we saw and i don't want -- i respect jay powell greatly. maybe they didn't understand once you got the election out of the way, there could be bullish no matter what. >> certainly that gets reflected in costco's december comps and b of a number where close was up 5% on the month. >> i know. look, david, i vastly prefer that we have more people being hired. 46,000 in healthcare. 40,000 in retail. are these things inflationary when we have mining and oil and gas and construction and wholesale trade and financial activities and business. no change. >> it's good. no change. >> little to no change. we can do one of two things. we can decide bonds should control the dialogue or we can look at delta or walgreens. you can say i don't count those earnings because the ten-year? >> of course not. >> that's what's happening. >> it has a big impact, of course. >> of course, it does. >> again, to come back in the broader perspective, where we were with rates prior to the election and after the rate cut, all we've done is go higher. >> look, the rate cut

>> remember, jay powell doesn't have many tools in his quiver, but how he has managed the economy ratesfe is still expensive. so you know we talk on and on. look at the data, look how strong the economy is and try to connect the dots of why people are so frustrated. well, look at the screen, right? things are still expensive eggs. you know, obviously extra expensive given bird flu. try to buy a plane ticket over the last couple of months. gas. even though it might be cheaper than where it was a year ago, it's still ticked up in the last month. so for the everyday person out there, especially that person who voted for donald trump because they are frustrated with the price of rent, mortgage, insurance on anything, we don't see that changing in the near future. and you've even seen donald trump sort of start to change his language when he was running and he said, grocery prices, we're going to get them down. and when he sat down with our colleague kristen welker a few weeks ago, he sort of said, yeah, i might not be able to get that done harder than it looks. >> well, i mean, you got heal

lisa: the question from jay powell about how we will not welcome any further weakening in the labor markete was a shift in tone from the federal reserve and could be one of the reasons why we saw such a backup in rates. if we see a big increase in initial jobless claims, does that unwind some of what we saw in december? jonathan: 8:30 eastern time. let's get an update on stories elsewhere with dani burger. dani: a deadly attack in new orleans' french quarter early on new year's day killed at least 15 people and injured dozens. the suspect, an army veteran was killed at the scene. the fbi is investigating the attack which involved a pickup truck and improvised explosive devices. the fbi is looking into possible connections to terrorist groups and whether the suspect acted alone. the attack happened hours before the sugar bowl was set to kick off at caesar's or proto--- superdome. elon musk says the explosion of a tesla cyber truck outside the trump las vegas hotel was probably an act of terrorism. the driver was killed and seven people suffered minor injuries. in a series of post, the tesla

i think just want to refer back to the fed press conference back in december which jay powell said someich is very rare because we never hear that from the fed. we never hear that they are chasing the puck of what policy is might be. the fed is baked in already in the plot and it's communication that is it's expecting a more difficult path for inflation. the market has priced it in. on the policy side from the upcoming administration, we are going to have tariffs on everything front and center, even if they are negotiating tactics. you need it for the negotiation piece. it creates anxiety in the bond market. jonathan: it makes the feds more interesting later on this afternoon. alicia: that's right. we'll hear who -- perhaps who and what and why. will i say that the incorporation of future policy as yet unknown is very unusual. i think we should just take it with a grain of salt. jonathan: what are your assumptions on tariffs. we have conflicting reports from "the washington post," cnn. i struggle to 2350eu7bd the news in this the president himself is all fake news. he wants to get it do

going to hear towards the end of the week and then let's get into the mindset of what you think jay powell it, if you will. >> so for the labor report, i don't think there are going to be many surprises. i think we're still going to be pretty close to around full employment, 4.2%. payroll employment will come in a bit under 200,000 but i think the real news is actually not coming from the data from december, but really what happens with tariffs and immigration policy once the new administration begins to make their decisions about what exactly the policies are going to be in those two areas. >> so that's the big question, though. we were talk about this "washington post" reporting as it relates to the administration, tariffs in particular, this idea that there's going to be tariffs across the board for what they are describing as critical items to our national security. how that's defined i think will be the big question. how do you think the federal reserve is supposed to think about all of this and are they supposed to think about this ahead of any action or not? >> so the fed is going t